Mayoral
Candidates
Respond To
Questions
The Business Journal presents
Part III in a series asking the top
mayoral candidates to respond
to two questions. The series concludes with the March 4 edition.

■ By TIFFANY L. RIDER
Editor
ong Beach has an opportuL
nity to be part of an application for the Los Angeles region to

Question

Damon Dunn

Robert Garcia

Bonnie Lowenthal

Doug Otto

Gerrie Schipske

What is your
understanding of the
role of the
Long Beach
City
Attorney?
What experience (such as
trial experience, managing other
attorneys,
previous
work for a
law firm), do
you believe
is necessary
for that individual to do
a good job?

(Please Continue To Page 12)

(Please Continue To Page 9)

Lawrence Maehara, owner of Berth 55 Fish Market and Seafood Deli, left, and Michael Redlew, general manager, Long
Beach Sportfishing, give a thumbs up to the recent news that the Port of Long Beach is not forcing them to move to make way
for a new fire station. See story on Page 7. (Photograph by the Business Journal’s Thomas McConville)

Bureau in the form of seven new
industry regulations that took
effect January 10. The core
rules, which have the most
impact on lenders and consumers and are intended to pre-

Question

POLITICALWIRE

Several years
ago, the
city’s
Economic
Development
Bureau was
eliminated.
Should the
Bureau be
reestablished? If so,
why and
under what
format? If
not, please
explain why.

In A Surprise, Firefighters Union
Backs Damon Dunn For Mayor

Turn To Pages 16-17
To Read Their Responses

vent another housing market crisis, may keep potential buyers
out of the market.
“I’ve been in the mortgage
space for most of my adult life,”
Pete Mills, senior vice president
for residential policy with the
Mortgage Bankers Association,
told the Business Journal. “I
haven’t seen such a dramatic
reconfiguring of the mortgage
space in my 30 years [in the
business].”
Of the seven regulations
required as part of the DoddFrank Wall Street Reform and
Consumer Protection Act of

become a federally designated
manufacturing community, which
could bring needed funding and
technical assistance to the area.
The designation competition,
which was launched in December
by the Obama Administration,
would provide up to 12 selected
communities preferential treatment for federal funding from a
pool of $1.3 trillion and assistance
from 10 different federal agencies.
The deadline to apply is March 14.
Leonard Mitchell, executive
director of the USC Center for
Economic Development, leads the
regional effort to apply for this
designation. He noted that for
Long Beach to be involved, a partner commitment letter must be
submitted by March 7.
Mitchell’s team at the USC
Center as well as staff from the
Los
Angeles
Economic
Development
Corporation
(LAEDC) are coordinating with
cities, small business development
centers, regional workforce investment boards, community colleges,
the California State University
system, research universities and

An Analysis Of The Mayoral
Race Seven Weeks Out
■ By GEORGE ECONOMIDES
Publisher Perspective
may be the biggest – and
Iing tsome
say the most surpris– endorsement of the 2014

According to Rex Pritchard,
president of the union, the board
vote was unanimous.
The significance of the
endorsement is that it provides
legitimacy to a candidate who
many thought of as an “outsider”
and who “hadn’t paid his dues”
(Please Continue To Page 18)

1985-’94: ‘Family Feud’
And ‘The Streak’

Long Beach election season: The
Long Beach Firefighters Local
372, one of the city’s most influential unions, is backing Damon
Dunn for mayor of Long Beach.

(Publisher’s note: To mark April’s 40th
Toyota Grand Prix of Long Beach, the
Business Journal has teamed up with the
Grand Prix Association of Long Beach to
present a series of articles highlighting
America’s #1 street race.)

ith the race on a solid
W
foundation under its
new
sanctioning
body,
Championship

Auto

Racing

Teams (CART), the Toyota Grand
Prix of Long Beach’s next decade
turned out to be racing’s version
of the Hatfields and the McCoys.
Specifically, the Andrettis and
the Unsers.
One patriarch, Mario Andretti,
was a genuine Long Beach folk
hero, an ex- Formula One champion and winner of the 1969
Indianapolis 500 who would go
on to win four Champ Car titles.
The other, Al Unser Sr., was a
(Please Continue To Page 21)

Collective Bargaining
Transparency Effort
Halted By City
Councilmembers
■ By TIFFANY L. RIDER
Editor
A presentation on how Costa Mesa’s collective bargaining transparency regulation
could be mirrored in Long Beach was
tabled after councilmembers opposed
exploring the option further.
The issue, which had been raised on
multiple occasions by 5th District
Councilmember Gerrie Schipske at the
city’s personnel and civil service committee level, was brought to the Long Beach
City Council on February 4 with support
from 3rd District Councilmember Gary
DeLong. The idea was to explore how to
restructure collective bargaining to
include an independent negotiating party
– as Costa Mesa has done – and increase
transparency in the process, a move that
may or may not result in a cost savings for
Long Beach.
Several councilmembers, including
Vice
Mayor
and
1st
District
Councilmember Robert Garcia and 8th
District Councilmember Al Austin, disagreed with the comparison of Long
Beach to Costa Mesa and with the development of an ordinance based on Costa
Mesa’s “civic openness in negotiations”
ordinance. The item was received and
filed, with no further action taken.
“There wasn’t real clear direction on
what they wanted to do,” according to
City Attorney Charles Parkin. He said
changing the city’s collective bargaining
policies would require certain procedures. “We could get the council there,”
he said, “if that becomes the council’s
desire.” ■

City Council Takes
Up E-Cigarette
Regulations
■ By TIFFANY L. RIDER
Editor
After a 5-1 vote on February 11 to
move forward on regulating e-cigarettes,
the Long Beach City Council hears a
final reading on the subject tonight
(February 18). Councilmembers Gary
DeLong, Patrick O’Donnell and Gerrie
Schipske left the council meeting prior to
the vote.
The regulations, as proposed by city
staff, involve amending an existing ordinance regulating tobacco products to
include e-cigarette devices, meaning e-cigarettes could not be used in public places
like in parks, near schools, on restaurant
patios or inside retail establishments.
Moreover, businesses that sell e-cigarettes would be required pay a yearly
operational permit and limit advertising
in the same way tobacco product advertising is restricted.
Alan Schroeder, partner and owner of

Long Beach Business Journal 3
Vapin USA in Downtown Long Beach, told
the Business Journal that regulating e-cigarettes like tobacco products “demonizes
vaping . . . Vaping shouldn’t be lumped into
that category.”
Vice Mayor and 1st District
Councilmember Garcia, who was the
sole dissenting vote on the item presented February 11, said during the meeting that while he understands the regulations would not ban e-cigarettes, the discussion on the dangers of e-cigarette use
might be unfounded until science proves
otherwise.
“The only part that is difficult for me is
that I have friends and family members,
particularly one who has been smoking
for 35 years, and has destroyed his
lungs,” Garcia shared during the meeting. “He’s never been able to quit, has
tried everything in the book and now that
he’s tried the e-cigarette he’s actually
been able to quit. I certainly don’t know
all the science behind what’s in that cigarette, but I couldn’t imagine it being
worse than what he was putting in his
lungs before.”
Back in December, the city council
approved directing the city attorney’s
office to draft an ordinance regulating ecigarette use. At the same time, council
directed the city attorney to prepare
options for the regulation of e-cigarette
business locations using the city’s zoning
laws. According to City Attorney Charles
Parkin, city staff is still working on those
options. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 4

NEWSWATCH
4 Long Beach Business Journal

February 18-March 3, 2014

Student-Volunteers
Offer Free Income Tax
Return Assistance
The Accountancy Department is home to 750
students, approximately 25 percent of all CBA
majors. They study a variety of topics, such as
Cost Accounting, International Accounting,
Auditing, and Accounting Systems, and are
sought after by national and
regional accounting firms
for internship opportunities
as well as employment upon
graduation. Through a longstanding initiative, they have
the opportunity to contribute
and give back to the local
community by providing
accounting-related
services.
By Jennifer Mae
For over 20 years, CBA
Formeloza
Accountancy
Accountancy majors offer
Major Class of
free e-filing for federal and
2015, CSULB
state income tax returns to
students and members of the community
through the Volunteer Income Tax
Assistance (VITA) program. The program is
coordinated by Dr. Sudha Krishnan,
Accountancy professor, and is a cooperative
effort with the Internal Revenue Service
(IRS) to provide free income tax assistance
to low- and moderate-income individuals
(less than $51,000 in 2013), the handicapped, the elderly and students.
This year’s program has 60 student-volunteers who have been trained and certified by
the IRS to prepare and e-file basic income
tax and foreign student tax returns. “The
program is a valuable civic undertaking that
also sharpens the students interpersonal
skills and allows them to apply classroom
concepts in a real-world situation,” Professor
Krishnan says.
Those interested in having their 2013 tax
returns prepared through the CSULB VITA
program should bring proof of identification;
Social Security cards, including spouse’s and
dependents’ (or a Social Security number verification letter issued by the Social Security
Administration); birth dates, including
spouse’s and dependents’; current year’s tax
package; wage and earnings statements (W-2,
W-2G, 1099-R, from all employers); and interest and dividend statements from banks (1099
forms). When filing taxes electronically on a
married filing jointly status, both spouses
must be present to sign the required forms.
The VITA program operates out of Room
237 in the CBA Building, from 8 a.m. to 5
p.m. Mondays through Thursdays, and 9 a.m.
to 3 p.m. on Fridays, and runs through
Friday, March 28. Appointments can be
made via email at vita.csulb@gmail.com.
Walk-ins are welcome.
(The College of Business Administration
at Cal State Long Beach is an AACSB
accredited business school that provides
undergraduates and MBAs with the knowledge and skills necessary to be successful in
their careers and to propel the economic
development of our region.) ■

The Long Beach City Hall in the center of the Long Beach Civic Center has been deemed seismically unsafe and would likely collapse in an earthquake
similar in magnitude to the Northridge Quake of 1994, according to a memorandum from city management staff. A request for proposals to build a new
civic center funded through a public-private partnership is scheduled for release February 28. (Photograph by the Business Journal’s Thomas McConville)

Civic Center
Retrofit Still
An Option
City Council Requested
Information Alternative
To A Total Rebuild
■ By SAMANTHA MEHLINGER
Staff Writer
Concerns over city staff’s safety, fiscal
prudency and entering the uncharted territory of a municipal public-private partnership for a new civic center in Long
Beach led to a request from city council
last week for further details on the option
of retrofitting the seismically unsound
city hall building.
The Long Beach City Council voted
unanimously on February 11 to direct the
city manager to report back with more

information clarifying the option to retrofit
city hall, how much it would cost and how
it could be financed. The vote was a substitute motion to an item proposed by 5th
District Councilmember Gerrie Schipske
which would have suspended the contract
with consulting firm Arup North American
Limited to develop a request for proposals
(RFP) for a new civic center until the new
city council and mayor take office in July.
Schipske criticized the city for not
issuing a request for qualifications (RFQ)
for retrofitting the building. However,
according to city staff reports, a seismic
study of the civic center found that even
if retrofitted, the building would become
uninhabitable in the event of an earthquake equivalent to the 1994 Northridge
Earthquake, which measured about 6.7
on the Richter scale. The seismic study
commissioned by the city council in 2006
and updated in 2013 suggested a significant magnitude earthquake with the
building in its current state would likely
cause “collapse of the entire structure,
resulting in significant loss of life.”

When asked by Schipske why city hall
is currently occupied considering the danger inherent in the event of an earthquake,
Assistant City Manager Suzanne Frick
responded, “We are taking a risk, but it is
a calculated risk. We don’t believe it is
such a risk that it necessitates the immediate evacuation of this building.” Due to
similar dangers, the Port of Long Beach
Headquarters is currently being relocated
to a temporary building on Airport Plaza
Drive until a new structure is built.
A memo from the city manager’s office
released last week pointed out that the
city would lose all the money spent on a
retrofit in the event of a large earthquake
– a cost estimated at about $200 million.
According to Frick, the city does not have
these funds to spend on a retrofitting
project. At the February 11 city council
meeting, she commented, “The retrofitting option requires us to go to voters
for a bond measure because there is no
funding for a retrofit.”
Thus, city staff looked for a way to
fund the building of a new civic center at

Improvements To Pine Avenue Downtown
Downtown Long Beach Associates President and CEO Kraig Kojian, left, 2nd District Councilmember Suja Lowenthal and Vice Mayor and 1st District
Councilmember Robert Garcia celebrate the start of a major rehabilitation project on Pine Avenue in the downtown area. Improvements to Pine Avenue
between Seaside Way and Anaheim Street will consist of street resurfacing, replacing damaged sidewalks and curbs, installing a traffic signal and
“scramble” pedestrian crossings, and planting new trees and shrubs. The project should take about a year, according to a statement from the city.
(Photograph by the Business Journal’s Thomas McConville)

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 5

NEWSWATCH
February 18-March 3, 2014

no additional cost to the city, meaning that
the city would not pay more than what it
currently does to maintain city hall. Staff
determined that a private-public partnership, in which there would be no tax burden to Long Beach residents, could be
cost-effective, according to a memo from
City Manager Patrick West. The RFP,
which is to be released on February 28 to
three teams selected among the proposed
project’s RFQ respondents, is for the
design, construction, financing, operations
and maintenance of a new civic center
funded by an annual payment of $12.6 million, which is currently how much the city
pays to maintain city hall.
The idea is to have the city lease the civic
center at $12.6 million annually from the
builder for a period of 40 years, according to
West’s memo. The memo acknowledges,
however, that city staff does not currently
know if this is actually feasible. At the
February 11 meeting, Schipske pointed out
that if the private-public partnership is not
feasible, the city would bear the burden of
paying the $500,000 stipend for each RFP
respondent approved by the council last year.
Eighth District Councilmember Al
Austin asked city staff at the council meeting if a public-private partnership had been
considered to fund a retrofit of the civic
center. “I just don’t think we’ve looked at
all of the options and variables,” he stated.
This led the council to make a substitute
motion to have staff report back with more
details on the cost to retrofit the civic center and to also report on financing options,
including a public-private partnership. ■

Long Beach Business Journal 5

Port Of Long Beach Plans To Pay Off Its Debt By 2051
■ By SAMANTHA MEHLINGER
Staff Writer
With about $602 million in current outstanding debt and another $1.6 billion to be
borrowed for capital improvement projects
in the next 10 years, the Port of Long
Beach’s finance team projects it will be
able to pay off this debt by 2051.
Every year, twice a year, the port makes
payments to reduce its debt, Sam Joumblat,
chief financial officer for the port told the
Business Journal. “This works just like
your mortgage,” he said. “Every month that
you pay your mortgage payment you are
paying interest and principal. So in our
case, we make two payments a year. One
payment is interest only, and the other payment is principal and interest,” he
explained. By doing this, the port reduces
its debt every year.
The payments the port makes to reduce
its debt come from port revenues, which
are sourced from the port’s operating
income, according to Joumblat.
Because the port is not a taxing authority, the bulk of this income comes from
port operations, although some grant
money also contributes. “By port operations, what we are referring to is the revenue received by leasing out our terminals
under long-term leases to private companies,” Steven Rubin, managing director of
finance and administration, explained in a
conference call with Joumblat. These

leases provide a base for revenues that the
port may expect every year, Joumblat said.
Additionally, Rubin said, the more cargo
volume coming through the port, the more
revenue the port makes. While cargo volume
may fluctuate, the port makes annual projections for how much cargo volume it may
expect every year based on recent activity.
The port’s finance department also annually produces a 10-year cash flow forecast
to ensure that the port has enough revenue
to comply with its debt management policy,
Rubin said. This policy requires that the
port always maintain enough cash on hand

to operate for 600 days and that it maintain
a debt service coverage ratio of two-to-one,
Joumblat explained. “In essence, if you
divide our operating revenue minus our
operating expenses by the debt services, it
cannot fall below two,” Joumblat said.
When the port makes its debt payments,
it wires the money to the trustee who in
turn wires the money to all of the port’s
bond holders, Joumblat explained. “Those
are the investors that invested in our bonds
and expect to be paid twice a year,” he said.
The port’s credit rating on these bonds is
(Please Continue To Page 6)

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 6

NEWSWATCH
6 Long Beach Business Journal

February 18-March 3, 2014
other port authorities having the ability to
do what weâ&#x20AC;&#x2122;re doing here.â&#x20AC;? He added that
the plan to pay off the debt helps the port
remain competitive.
â&#x20AC;&#x153;I, too, worry to some degree as weâ&#x20AC;&#x2122;re
spending all of this money at this time to
remain competitive. It is still frightening a
bit,â&#x20AC;? Long Beach Harbor Commission
President Doug Drummond commented at
the meeting, but added that the report from
Rubin, Joumblat and the financial team
was â&#x20AC;&#x153;excellent.â&#x20AC;? â&#x2013;

Long Beach City Hall
News In Brief
â&#x2013; By SAMANTHA MEHLINGER
Staff Writer
Port of Long Beach CFO Sam Joumblat, left, and the portâ&#x20AC;&#x2122;s managing director of finance and administration, Steven Rubin, look over documents related to the portâ&#x20AC;&#x2122;s debt profile. On February 10, Joumblat
gave the Long Beach Board of Harbor Commissioners a rundown of the portâ&#x20AC;&#x2122;s debt and how it will be
paid off by 2051. (Photograph by the Business Journalâ&#x20AC;&#x2122;s Thomas McConville)

Port Debt
(Continued From Page 5)

AA from Fitch Ratings, Aa2 from
Moodyâ&#x20AC;&#x2122;s Investor Service and AA from
Standard & Poorâ&#x20AC;&#x2122;s. The Port of Los
Angeles holds the same ratings. Joumblat
said these are â&#x20AC;&#x153;the strongest seaport ratings in the United States.â&#x20AC;?
While all these agencies list the portâ&#x20AC;&#x2122;s
revenue stream stability and increasing
cargo traffic as strengths, in comparison to
other U.S. ports, concerns cited in the

Ball Field Maintenance Services
SWAT Rifles
Naples Island Seawall Repairs
Buoys and other Barrier Floats
Roach Control Service
Water Main Bridge Crossings Repair
Architectural Srvcs, Marine Stadium
Gas Main and Service Lines
Law Enforcement Searchlight System
RFQ for Solar Power Purchase

portâ&#x20AC;&#x2122;s debt profile include past labor and
traffic congestion issues, competition from
other ports due to the Panama Canal expansion and potential weakened trade from
Asia due to â&#x20AC;&#x153;sustained economic downturns in that region.â&#x20AC;?
Rich Dines, vice president of the Long
Beach Board of Harbor Commissioners,
remarked during a debt presentation at
the harbor commission last week that the
portâ&#x20AC;&#x2122;s debt keeps him up at night. Still, he
told Joumblat, â&#x20AC;&#x153;I really feel that you put
us in a great position, and I donâ&#x20AC;&#x2122;t see

UPCOMING BID OPPORTUNITIES
Historical Preservation Services
Surveillance Vehicles
Personal Watercraft
Physician Services
Polygraph Services
Psych Eval Services
Bidder Registration
Register with the City of Long Beach at www.longbeach.gov/purchasing to
receive notifications of bid opportunities. Additional details on upcoming
bids and how to register can be found on the website.
Small Business Enterprise Program
Take advantage of the City of Long Beach Small Business Enterprise (SBE)
Program. To learn more about becoming a part of the SBE Program and
certification process, visit the Cityâ&#x20AC;&#x2122;s Purchasing website.
HUD Section 3 Program
The City of Long Beach Section 3 Program provides economic and employment
opportunities to low-income residents and businesses. More information is located
on the Cityâ&#x20AC;&#x2122;s Purchasing website.

www.longbeach.gov/purchasing

www.longbeach.gov/pw/towing/auction.asp

Online City Expenditures â&#x20AC;&#x201C; Tonight
(February 18) the Long Beach City Council
votes on an item from 5th District
Councilmember Gerrie Schipske requesting that the city manager provide information on the cost and feasibility of using a
website called OpenGov to post the cityâ&#x20AC;&#x2122;s
expenditures online. The platform allows
public access to revenue and expenditure
data by fund, department or type of account.
So far, 62 cities in the U.S. use the online
platform, according to Schipskeâ&#x20AC;&#x2122;s memo.
Gas Rate Increases â&#x20AC;&#x201C; The council votes
tonight on allowing gas utility rate increases
of about 86 cents per month to fund costs
associated with federal regulation compliance. These regulations mostly involve
replacing aging gas delivery infrastructure
and ensuring the safety of that infrastructure.
$900,000 In Grants For Trail Projects
â&#x20AC;&#x201C; The city council votes tonight to accept
$900,000 from the Los Angeles County
Regional Park and Open Space District for
three park trail projects and to execute any
documents necessary to administer these
projects. The grants fund the Drake/Chavez
Greenbelt trail, Pacific Electric Right-ofWay trail and the Wrigley Greenbelt trail.
$5 Million For Concrete Repairs â&#x20AC;&#x201C; The
city council approved a $5 million increase
to a contract with CJ Concrete
Construction, Inc. on February 11, bringing
the total contract amount to $13 million.
The company provides concrete repairs and
related improvements for the city.
Medical Bill And Ballot Opposition â&#x20AC;&#x201C;
On February 4, the council voted 5-3 to
oppose bills and measures that would

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weaken the Medical Injury Compensation
Reform Act of 1975. The act is meant to
ensure that injured patients are fairly compensated, that medical liability rates are
kept in check and that frivolous lawsuits
are limited, according to a resolution
drafted by the city attorney. Schipske, 7th
District Councilmember James Johnson
and 8th District Councilmember Al Austin
dissented. Ninth District Councilmember
Steven Neal was absent.
Medical Marijuana Ballot Label
Approved â&#x20AC;&#x201C; As part of its consent calendar,
the city council approved a ballot label for
Measure A, a marijuana tax initiative, to be
included on the April 8 primary nominating election ballot. The label asks if the city
should impose a general tax on marijuana
businesses set at $15 to $50 per square foot
annually.
$10 Million In Project Management
Contracts â&#x20AC;&#x201C; With four councilmembers
absent, remaining city councilmembers
approved $10 million in contracts for
project management services related to
city capital improvement projects on
February 4. The contracts are with five
firms and each lasts two years.
Contract To Replace City Systems â&#x20AC;&#x201C; A
$457,620 contract with Plante & Moran,
PLLC for professional consulting services
related to replacing systems for the cityâ&#x20AC;&#x2122;s
finance and human resources departments
was approved by the city council on February
4. The city council approved a plan to replace
these departmentsâ&#x20AC;&#x2122; management systems as
part of the 2014 fiscal year budget.
More Than $1 Million For Computers
â&#x20AC;&#x201C; On February 4, the city council approved
a $1,157,552 contract with Paradigm
System Solutions for the purchase of
Toughpad mobile computers. The computers are for use in fire, harbor and police
department vehicles. The contract is funded
by the Urban Area Security Initiative Grant.
Redondo Avenue Improvements â&#x20AC;&#x201C; A
project to improve Redondo Avenue begins
this week, according to a press release from
the City of Long Beach. Work includes
replacing damaged curbs, gutters, driveways, alley entrances and sidewalks, shaving tree roots, reconstructing deteriorated
pavement, resurfacing pavement, and
installing pavement markings, striping and
signage. â&#x20AC;&#x153;We continue to move forward
with infrastructure improvements, and this
important project will improve another
major thoroughfare in our city,â&#x20AC;? Mayor Bob
Foster said in the statement. â&#x2013;

Ribs/Chic
Ribs/Chicken/Sausages/Brisket/Cornbread
ken/Sausages/Brisket/Cornbread & 2 side or
orders
ders for
for
o 3-4
3-4
(*or an
any
y or
order
der of $40 or more)
Cannot be combined with any other offer, coupon or discount.

LBBJ

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 7

NEWSWATCH
February 18-March 3, 2014

Long Beach Business Journal 7

Port Gives Berth 55 And Other
Businesses The Okay To Stay
■ By SAMANTHA MEHLINGER
Staff Writer
After a nearly two-year battle to keep
their businesses from being razed and
turned into a new fire station for port security purposes, the operators of Berth 55
Fish Market and Seafood Deli and Long
Beach Sport Fishing are relieved that, at
least for now, they have prevailed.
In 2012, the City of Long Beach Harbor
Department decided to use Berth C55, the
location of several small businesses, to relocate Fire Station 20, which had to be torn
down to make way for the Gerald Desmond
Bridge replacement project. The Long Beach
Business Journal reported the news first in
May of 2012, an article that Lawrence
Maehara, owner of Berth 55 Fish Market and
Seafood Deli, said made a huge impact.
In a follow-up article in June 2012, port
spokesperson Art Wong told the Business
Journal, “If there were other places we
could move, we could be looking at them .
. . But there aren’t.” A press release dated
February 5 of this year, however, said that a
harbor department study “has found suitable
alternative locations for development of new
fire and security facilities in the port.”
Michael Redlew, general manager of
Long Beach Sportfishing, told the
Business Journal, “It sounds to me like
there weren’t enough locations offered to
the harbor commission to debate.”
Maehara said he has known since
Christmas that the harbor department was
not going to shut down his business, but the
port only officially announced the decision
two weeks ago. “It felt like a Christmas present to me,” he said of receiving the news.
Redlew has also known for a while, but
wasn’t ready to react to the news until it
was official.
“I was relieved initially,” he said of his
response to the port’s official announcement. “My second reaction was, okay,
where do we go from here,” he said,
explaining, “There is still a lot of work to
do to get a long term lease on that property,
because it doesn’t really help us just to say
its not going to be torn down. We need to
establish that it is going to have a future so
there can be some investment.”
The businesses have met with the port’s
real estate department to discuss the possi-

bility of a 15- to 20-year lease, Redlew
said, “And they did not say no to that,
although nobody is making any promises.”
Maehara said that his father, who previously operated the business before passing
away five years ago, continually worked to
get lease extensions.
“Frustrating” is the word Redlew used to
describe his experience trying to get the
harbor department to consider other locations for the fire station. “I think in reality
they thought when they terminated the lease
we would go away quietly. But we didn’t,”
he mused. Ultimately, he believed “public
pressure” caused the port to reassess its
position. Wong confirmed that community
support played a role. “After the public support for Berth 55, we went back and reexamined possible sites . . . and we found feasible options,” he told the Business Journal.
Port staff has always been receptive to
his inquiries, Maehara said, noting that the
harbor commission and Mayor Bob Foster
were always supportive of the businesses.
Now that the businesses are allowed to
stay – although for how long is still in the
air – Maehara is considering investing in
the property. After he fixes the place up
with paint and patio work, he intends to
reach out to the public to see what changes
the local community would like to see
made at the location.
Port staff should select a new location
for the fire station by this spring or summer, Wong estimated. When the final decision is presented to the harbor commission
for approval depends upon whether or not
an environmental impact report is
required, which Wong called a “many
months-long process.” ■

Crimson Pipeline Begins
School Outreach Program
Long Beach-based Crimson Pipeline is
launching a program with area schools to
raise awareness about pipeline safety. The
program targets elementary and middle
schools students. A company spokesperson
said in a statement that “pipelines can be
located anywhere . . . it is vital that students, parents and all members of the community know the steps that need to be taken
before beginning any digging project.” ■

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1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 8

NEWSWATCH
8 Long Beach Business Journal

February 18-March 3, 2014

Final Employer Responsibility Rules Under The
Affordable Care Act Includes Delay Of Mid-Size Business Mandate
Companies With 50-99 Employees
Have Until 2016 To Comply
■ By TIFFANY L. RIDER
Editor
The federal government has given
employers more leeway to prepare for the
transition to the new health care insurance
regulatory environment dictated by the
Affordable Care Act (ACA) by delaying
the compliance requirements of mid-sized
businesses until 2016.

In a joint announcement February 10, the
U.S. Treasury and Internal Revenue Service
issued final regulations that implement the
employer mandates of the Affordable Care
Act (ACA) in 2015. The two federal entities
announced mid-sized businesses – those
with between 50 and 99 employees – must
report on health care insurance coverage for
employees in 2015, but are not required to
pay the federally mandated fine for not providing insurance until 2016.
Large employers – those with 100 or
more full-time workers – would be phased
in under the new requirements. These

employers would need to provide coverage
to 70 percent of their workers in 2015 and
95 percent of their workers in 2016.
Small businesses – those with fewer than
50 full-time workers, making up about 96
percent of the nation’s employers – are not
required to provide coverage.
“While about 96 percent of employers
are not subject to the employer responsibility provision, for those employers that are,
we will continue to make the compliance
process simpler and easier to navigate,”
U.S. Assistant Secretary for Tax Policy
Mark J. Mazur said in a statement.

Neil Trautwein, vice president and
employee benefits policy counsel for the
National Retail Federation, compared the
announcement to an Olympic feat. “The
Administration should receive a gold medal
for recognizing the enormous complexities
of the Affordable Care Act, and its agility
and flexibility in working with retailers and
others in crafting these much-needed and
commonsense reforms and revisions,” he
said in a statement. “Continued simplicity,
streamlining and clarification of the
Affordable Care Act, are in the best interests of employers and employees and the
Administration and Congress.”
According to the U.S. Bureau of Labor
Statistics’
Quarterly
Census
of
Employment and Wages, there were a total
of 1,273,556 private sector businesses
nationwide with 50 to 99 employees as of
the first quarter of 2013. Of those, 26,127
businesses are located in California.
“While this is a necessary step, it’s the
next step that is the most important,” Rob
Lapsley, president of the California
Business Roundtable, told the Business
Journal in an e-mail. “All of the major
problems must be fixed by the
Administration in order to help remove
some of the regulatory and cost uncertainty
that is hurting investment and job creation
decisions by businesses of all sizes.”
Many of those businesses are represented in the retail sector, which includes
restaurants. Jot Condie, president and CEO
of the California Restaurant Association,
said in an e-mail that he appreciates the
response from the federal government to
the concerns about the employer requirements of the ACA.
“It’s been difficult for thousands of
restaurants to determine what their costs
are actually going to look like and how
those increases will affect their ability to
keep their doors open,” Condie said.
“Though there are still some questions and
concerns to be determined, the extra time
and tweaks to the requirements’ details will
assist restaurant operators on the road to
compliance.” ■

Court Dismisses Lawsuit
Over Santa Monica Airport
In a landmark decision February 13, a
U.S. District Court judge sided with the
Federal Aviation Administration in a
motion to dismiss a federal lawsuit brought
by the City of Santa Monica over the future
of Santa Monica Municipal Airport,
according to a statement released by the
Aircraft Owners and Pilots Administration,
which, along with the National Business
Aviation Association (AOPA), filed a
friend of the court brief in support of the
FAA’s motion. Santa Monica officials were
seeking permission to use the airport property as they wished. The lawsuit challenged
the FAA’s claim that the city was obligated
to operate the property as an airport or, if
they do not, then the right of possession to
the property could – at the option of the
U.S. government – revert to the U.S. AOPA
expects the city to make another effort. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 9

NEWSWATCH
February 18-March 3, 2014

Manufacturing
Designation
(Continued From Page 1)

other academic institutions to craft an application that would designate the region as
what many consider it to be already – a hub
for aerospace and defense manufacturing.
“If you look historically, many industries
have been seeded by aerospace and defense
research,” Mitchell told the Business
Journal. JoAnne Golden-Stewart, director
of public policy for the LAEDC, told the
Business Journal that this designation is
critical. “The Los Angeles region is the
manufacturing capital of America,” she
said. “We are working with Long Beach to
make sure the city is being competitive as
part of this proposal.”
The application requires proof that the
region is adequately equipped to hold the
designation – quantified in time and money
spent – and has strategies for investing in
the following areas: workforce and training,
infrastructure and site development, trade
and international investment, operational
improvement and capital access, advanced
research and supply chain support.
“Long Beach has quite a bit to offer in
each of those categories,” Golden-Stewart
said. “It’s a very critical player.”
Mitchell agreed. The Long Beach
College Promise program, which provides
a path for high school students to get into
college, would be a valuable addition to the
application, according to Mitchell.
“The region has invested a lot in STEM

Long Beach Business Journal 9
(science, technology, engineering and
mathematics) education,” he explained.
“We’re trying to build the next steps for
those kids to show them the future of manufacturing. We have strengths we will not
lose because we have invested so heavily in
our education infrastructure. What we are
doing now is to prepare for the future.”
As the university redevelops curricula for
manufacturing, students can start looking at
manufacturing as being creative as developing a computer game, Mitchell said. “For
those people who want to make something,
there are so many opportunities,” he said.
Fifth District Councilmember Gerrie
Schipske, who serves as a member of the
Los Angeles Jobs Council, learned about
the opportunity and placed an item on the
February 18 city council agenda to encourage the city’s participation.
“We have one of the highest unemployment rates in the county, so anything that
brings jobs will be a benefit to the city,”
Schipske told the Business Journal.
“We’ve got to get involved in this process
so the city can explore what actual benefits there would be.”
The goal is to ensure that investments are
industry driven, according to Mitchell.
“What we’re trying to do is to support this
industry and its supply chain in moving
into its future through advanced manufacturing technologies,” he said. LAEDC has
been conducting conversations with businesses in aerospace and defense manufacturing, and further discussion will occur as
the application is developed. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 10

NEWSWATCH
10 Long Beach Business Journal

February 18-March 3, 2014
the investment in Technology Readiness
Level (TRL) 4-7 research,” Molnar says.
(TRL is a measure of the development of a
new idea or technology; levels 4-7 span the
process from laboratory validation to operational prototype demonstration).
“This is even more difficult for small and
medium sized companies – not to mention
start-ups – to have the access to the best
minds and equipment to develop new innovative ideas. These institutes create that
space, to “de-risk” new technologies and
get them into production here in the U.S.”
It is not a plan without its critics. Some
argue that by funding such institutes, the
federal government will engage in determining “winning” and “losing” technologies, a function that is best performed by
competitive market forces.
But others argue that the success of other
nations in creating and operating such riskalleviating public-private institutes has
proven so successful that the U.S. cannot
afford to ignore manufacturing innovation
investment. It is not just the next generation
of products, but the infrastructure of manufacturing those products, its tendency to
perpetuate itself, and the economic benefits that are generated by that ecosystem,
now and in the future, that are so incredibly
significant, Molnar says.
“In addition to not benefiting from the
economic and jobs impact that manufacturing delivers, the next generation of technology advances frequently are linked to
where manufacturing occurs,” Molnar
says. “The mission is to create new hubs
here in the U.S. and to greatly reinforce the
existing hubs.” ■

Institutes For
Manufacturing
Innovation: ‘The
Goal Is To Change
The Rules . . .’
■ By MICHAEL GOUGIS
Contributing Writer
The threat to any region’s economic
health posed by a loss of manufacturing
isn’t short-term. The real damage is longterm, and insidiously difficult to undo.
Simply put, once something is manufactured on a large scale in one geographic
location, it is immensely difficult for other
regions to compete with that concentration
of knowledge, facilities and networks. That
means most of the people who have knowledge in manufacturing and innovating on
that topic tend to converge in the area
where most of the activity is taking place.
And that means new developments, the
technological and manufacturing breakthroughs, tend to come from that region
and reinforce its position of prominence in
that sector. For example, you may have
heard of a place called Silicon Valley; by
one estimate, those few square miles
account for one-third of all venture capital
investments in the United States.
Innovation draws investment; the investment nurtures development and manufacturing; the cycle perpetuates the region’s
dominance in the industry.
To create, preserve and grow a healthy
manufacturing sector, you have to cultivate
an ecosystem conducive to manufacturing.
To that end, federal officials are pushing
forward with a National Network for
Manufacturing Innovation program.
Anchored by a national network of
Institutes for Manufacturing Innovation,
the program is designed to make sure that
the nation remains competitive in not only
developing new ideas, but retains and
expands its ability to manufacture the products based on those technological refinements and breakthroughs.
“Manufacturing is strategic,” says
Michael Molnar, director of the Advanced
Manufacturing National Program Office
and the National Institute of Standards and
Technology’s Advanced Manufacturing
Program Office, part of the U.S.
Department of Commerce. “The goal is to
change the rules.”
Molnar, who is the 2014 president of
SME (formerly the Society of
Manufacturing Engineers), is scheduled to
be the featured speaker on the final day of
the upcoming AeroDef Manufacturing
Summit & Exposition, scheduled for
February 25-27 at the Long Beach
Convention & Entertainment Center.
Molnar’s task, as head of the Advanced
Manufacturing National Program Office, is
to help establish the network of Institutes for
Manufacturing Innovation. The first institute was created in 2012 by a consortium of
companies, universities, colleges and nonprofit institutions that formed the National
Additive
Manufacturing
Innovation

The National Additive Manufacturing Innovation Institute is the first such institute supported by the U.S.
government. It has since been renamed America Makes. (Image courtesy of SME)

Institute. It was funded by President Obama
reprogramming $30 million in money earmarked for four federal agencies, as well as
$40 million from the consortium, the
national program office says.
Several other institutes are scheduled to
be created via executive action, Molnar
says, with Congress studying proposals to
fund a network of up to 45 such institutes
over the next 10 years.
The function of the institutes differs from
investments in basic research. It’s not enough
simply to come up with a new idea. The challenge is in bringing it to competitiveness.
Some innovation and manufacturing analysts
use phrases like the “mountain of death” to
describe the market forces that generate
innovation-suffocating environments.
One solution that has worked in other
nations has been the formation of innovation institutes. The model system is centered in Germany and is known as the
Fraunhofer Society. Funded by contract
work and federal and local government
funding, the public-private society operates
67 institutes – including seven in the U.S. –
that focus on basic and applied research
and contract work.
Several other countries have established
public-private institutes to help individual
companies spread the work and the risk of
innovation, thus helping ensure such
changes make it into the economic chain.
“Underpinning this wealth-creating
transformation to commercialization are
new production processes that often are

needed by entire industries, but usually are
too risky for an individual company to
develop alone. Other countries have
focused on this “scale-up” opportunity, so
while the U.S. remains the world leader in
invention, the products are increasingly
being manufactured elsewhere,” the
national program office says.
“Currently, Germany, Korea and Japan
each have more R&D-intensive manufacturing sectors than the United States, have
positive balances in trade of goods, and
have made substantial investments in manufacturing, similar to the funding proposed
for the NNMI.”
The idea behind the institutes in the U.S.
is to “de-risk” new technology, Molnar
says. “Scaling-up” new technologies to the
level where they provide the maximum
return on investment can take longer than
the threshold of returns for individual companies, or can exceed an individual company’s risk threshold.
“The goal of manufacturing innovation
institutes is to strengthen the innovation
performance, competitiveness, and job-creating power of U.S. manufacturing, by
addressing the “scale-up” issues of accelerating new materials and new technologies
into U.S. production,” Molnar says.
“NNMI is about expanding existing manufacturing hubs and creating new hubs
around these future technologies.
“The complexity, high risk and oftentimes long time horizons means individual
companies cannot undertake by themselves

News Briefs
• The Boeing Company delivered
Kuwait’s first C-17 Globemaster III airlifter on February 13. It marked the 260th
C-17 delivery, of which 223 have been to
the U.S. Air Force.
• The Boeing Company announced on
February 9, during the Singapore Airshow,
that it forecasts a $1.9 trillion, 20-year market for new airplanes in Asia Pacific. That
region represents 36 percent of the world’s
new airplane deliveries.
• TechAmerica Foundation based in
Washington, D.C., reported that technology
merchandise exports from California to the
world totaled $45 billion in 2012. However,
the state fell from the top spot, giving way
to Texas. Leading U.S. tech export destinations in 2012 were Mexico ($37.8 billion),
Canada ($28 billion), China ($13.9 billion), Japan ($9.2 billion) and Hong Kong
($9.2 billion).
• The Port of Los Angeles experienced a
2.5 percent increase in cargo volumes during January 2014 as compared to a year
earlier.
• The U.S. Census Bureau reported
January 30 that Chinese small business
owners make up the highest percentage of
Asian small business owners in the U.S.
The bureau completes a “Survey of
Business Owners” every five years.
• The National Retail Federation released
its 2014 economic forecast on February 6,
projecting retail industry sales (which
exclude automobiles, gas stations and
restaurants) will increase 4.1 percent. It
expects online sales in 2014 to grow
between 9 and 12 percent. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 11

FINANCIAL SERVICES INDUSTRY
February 18-March 3, 2014

Long Beach Business Journal 11

ANALYSIS

Consumers, Financial Services Providers,
Retailers Share Responsibility In Fraud Protection
Community Bankers of America (ICBA),
told the Business Journal that, “no matter
where the breach happens, community
Recent data breaches at big-box retailers banks are the stewards of their customers’
Target, Neiman Marcus and Michaels have information. The back and forth you’re
caused thousands of consumers to franti- hearing about is where Target and these
cally figure out how to best secure their other retailers have held onto private, perpersonal and financial data. The effort, sonal information.”
In an effort to prevent fraud, banks like
however, is only one link in the payment
system chain that must support anti-theft Wells Fargo use high tech systems to continually monitor accounts for suspicious
protections.
According to the American Bankers activity. “If we believe the security of a
Association (ABA), that system remains debit or credit card is at risk, Wells Fargo
strong in its support of the $3 trillion that is will take action to safeguard our cusspent each year by credit and debit card tomers’ accounts,” Alvarado said. He
users. While banks take responsibility for could not provide further explanation in
replenishing consumer accounts in the just how that data is secured because
event of a retail breach, the ABA has “sharing any information about our fraud
asserted that all participants in the payment prevention measures would jeopardize
system chain are responsible for keeping their effectiveness.”
Banks receive pennies on the dollar for
data secure.
fraud losses and incur other
costs in providing fraud protection for their customers,
according to Reuter, who
noted in his testimony that
banks accounted for less than
8 percent of reported
breaches since 2005 while, at
the same time, bearing more
than 60 percent of fraud
losses. “More needs to be
done to stop this kind of fraud
in its tracks,” Reuter said.
One such effort, being led
by major payment procesEach link along the payment system chain has a responsibility to sors, would require EMV
provide security to protect against fraud, including the consumer. (chip) technology. Used glob(Image courtesy of sxc.hu)
ally in place of credit card
magnetic stripes, the chips
James Reuter, executive vice president of help reduce fraud when making purchases
FirstBank in Lakewood, Colorado, testified in-person. Visa, MasterCard, Discover and
on this matter in front of the U.S. Senate American Express have all indicated plans
Subcommittee on National Security and to migrate to an EMV-based payment infraInternational Trade and Finance on structure in the near future.
February 3 on behalf of the ABA.
“Today, very few domestic merchant
“When a retailer like Target speaks of its terminals support EMV technology, so
customers having ‘zero liability’ from any EMV cards issued have limited merfraudulent transactions, it is because our chant acceptance in the United States,”
nation’s banks are making customers according to Alvarado. “As merchant chip
whole, not the retailer that suffered the card acceptance gains popularity in the
breach,” Reuter said. “Banks swiftly U.S., we will continue to evaluate the best
research and reimburse customers for way to support our customers’ credit card
unauthorized transactions, and normally and debit card needs.”
exceed legal requirements by making cusThough the shift to EMV would help
tomers whole within days of the customer reduce fraud in face-to-face transactions,
alerting them.”
Thomas said it would not protect personal
This is a pertinent fact in the data data associated with that card when
breach incidents, according to Ben stored by a retailer.
Alvarado, senior vice president and
By swiping an EMV card, a chip inside
regional president for Wells Fargo Orange communicates with the EMV payment-proCounty. “It’s important to note that the cessing device and prompts the cardholder
systems involved in recent breaches of to enter a pin to validate their identity.
credit and debit card information belong
“The chip would prevent hackers from
to the retailers who announced those creating a counterfeit card,” Thomas said.
breaches – not to Wells Fargo,” he told the “But you still need to protect consumers’
Business Journal. “However, Wells Fargo information. Anyone in that payment chain
is doing everything possible to protect who has access to that data should be a
our cardholders and to be helpful to this guardian of that information. It doesn’t do
investigation.”
us any good if we are the only ones protectLilly Thomas, vice president and regula- ing that information. You are only as strong
tory counsel for the Independent as your weakest link.”
■ By TIFFANY L. RIDER
Editor

What must not get lost is that personal
responsibility is integral to the strength of
that chain. Travis Barr, first vice president and wealth management advisor for
Merrill Lynch, told the Business Journal
that, in addition to setting up security and
fraud protection for financial accounts,
Bank of America Merrill Lynch recommends that all clients regularly change
passwords, sign up for a third-party serv-

ice to track credit and potential fraud,
monitor account statements regularly and
shred everything.
“Just like an annual checkup for your
body, people should be doing an annual
credit check,” Barr said. “I am fascinated
on how often things are found prior to it
becoming a problem, meaning our systems must be absolutely amazing for
them to notice something when millions
of transactions are happening. I believe
our bank is doing a good job in terms of
putting a lot of safeguards in. But there
should be some self-ownership on this.
Calling your local bank and calling your
financial advisor is a great first step.” ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 12

FINANCIAL SERVICES INDUSTRY
12 Long Beach Business Journal

February 18-March 3, 2014

Lee Vieira, branch manager at Cherry Creek Mortgage Company in Long Beach, reviews the requirements for a qualified mortgage loan with a potential
borrower. Vieira referred to the new rules as “closing the door after the horses are gone.” (Photograph by the Business Journal’s Thomas McConville)

Mortgage
Lending Rules
(Continued From Page 1)

2010, three are having the most impact,
according to Mills: the qualified mortgage
rule, the loan originator compensation rule
and the mortgage servicing standards rule.
Under the qualified mortgage rule,
lenders are required to make “a reasonable, good-faith determination” that borrowers have the ability to repay. Though
the rule does not ban any mortgage products, Mills said it has increased risk exposure for lenders who do not offer qualified mortgages.
For example, if a borrower is able to

take out a mortgage loan that is considered a qualified mortgage, and he or she
has problems repaying the loan, that individual may seek litigation against the
lender for not making the “reasonable,
good-faith determination” of the borrower’s ability to repay.
Some aspects of the qualified mortgage
rule are product specific in that adjusted
rate loans must be underwritten to avoid
payment shock to the borrowers and that
negative amortization loans do not qualify. Others are price specific, such as the
3 percent cap on points and fees charged
by the lender.
Others still are borrower specific,
including the debt-to-income ratio. “If

your housing payment and other debt
exceed 43 percent of your income, then
you are outside of a qualified mortgage,”
Mills said. While lenders are still able to
offer home loans outside of the qualified
mortgage space, those products will have
significantly higher interest rates and
higher risk premiums.
The loan originator compensation rule
is tied to the 3 percent cap rule for qualified mortgages. Anyone who negotiates,
assists or modifies a loan can only make
a 3 percent profit off a loan of $100,000
or more. That amount includes origination costs, administrative charges, processing and underwriting fees – all
finance charges except real estate or
“We are continuing
to work on skillfully
building our mortgage
business,”
Robert
Renteria,
vice president and
area manager for
First Bank, told the
Business Journal.
Under the new mortgage lending rules,
Renteria said, “borrowers who qualify
will still be able to
obtain financing.”
(Photograph by the
Business Journal’s
Thomas McConville)

third-party fees. Mortgage loans for
between $60,000 and $100,000 have a
cap of $3,000. Those between $20,000
and $60,000 have a 5 percent cap.
Under the new mortgage servicing rule,
regulations set standards for how lenders
interact with borrowers in terms of delinquencies and how they work with borrowers on loan modifications. The rule also
discusses how soon a lender can move
forward with foreclosure.
Ben Alvarado, senior vice president
and regional president for Wells Fargo
Orange County, told the Business Journal
in an e-mail that these new regulations
impact the way all mortgage lenders do
business in the future. “We believe that
overall the new regulations strike an
appropriate balance between providing
consumer protection and ensuring continued access to credit,” he said.
California Bank & Trust had to revise
its lending guidelines to meet the qualified mortgage standards, according to
Private Mortgage Banking Business
Development Manager and First Vice
President Michael Smith. “At California
Bank & Trust we have always upheld the
highest quality lending standards so we
have had to make some adjustments but
no radical changes in our underwriting
philosophy,” he said in an e-mail.
Potential borrowers may find fewer
mortgage products to choose from as a
result of the rules, Smith said. At the
same time, he said, those customers
should expect to provide more documentation supporting their ability to repay
than they may have in the past.
Robert Renteria, vice president and
area manager for First Banks’ branch in
Bixby Knolls, told the Business Journal
that these rules should have very little
impact on the company’s mortgage customer base. “Borrowers who qualify to
buy a home will still be able to make that
purchase,” he said. “Banks are making
loans outside of the qualified mortgage
rules for those exceptional clients that do
not meet the more stringent criteria.”
“These rules are supposed to make us
cognizant of making loans to people who
could qualify,” Lee Vieira, branch manager at Cherry Creek Mortgage Company
in Long Beach, told the Business Journal.
“It’s kind of silly. In my opinion, if we
can’t convince our underwriters that a
mortgage can’t be sold in the secondary
market, we’re not going to make the loan
anyway.”
According to Vieira, these rules are
“closing the door after the horses are
gone,” meaning that they take effect after
the poor products and lack of responsibility in lending that caused the most recent
housing bubble have been mostly eradicated. “The rules have had probably more
of a fear factor because, in the past, only
10 to 20 percent of loans were audited,”
Vieira said. “This offers the ability to
drill down on loans. There will probably
be a lot less fraud.”
Even so, lenders must weigh staying
in the business under these rules against
the heightened litigation risk, Mills
said. “There are costs that are going to
be greater for a small lender,” he said.
“And there is a smaller base to spread
those costs.” ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 13

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 14

FINANCIAL SERVICES INDUSTRY
14 Long Beach Business Journal

February 18-March 3, 2014

The Future Of
Money: Bitcoin
Becoming A
Popular Currency
Alternative
■ By TIFFANY L. RIDER
Editor
Large and small, a growing number of
businesses are accepting the virtual currency Bitcoin as the debate over how it
fits into existing regulation and the economy continues.
Major online retailer Overstock.com
partnered with Bitcoin wallet service
Coinbase in January to begin accepting
Bitcoin as a form of payment.
Overstock.com touts itself as the first
major retailer to accept the digital currency.
Web-based travel agency CheapAir got its
start with Bitcoin payments back in
November and promotes itself as the first
such agency to accept Bitcoin. TigerDirect,
an online retailer of electronics with some
brick-and-mortar locations, just a few
weeks ago added itself to a growing list of
major companies accepting Bitcoin.
Bitcoin isn’t just catching on with major
retailers. Signal Hill-based restaurant parts
supplier Centerlen Services, co-owned and
managed by Darryl Webb, began using

Efforts to improve security, as a result of the recent
hacking that resulted in the theft of $2.7 million
worth of Bitcoin from the underground marketplace Silk Road 2, are part of the challenges in
making Bitcoin a viable currency. (Image courtesy
of Bitcoin.org)

Bitcoin late last year. The company accepts
Bitcoin as payment from customers and
plans to use Bitcoin to pay its suppliers as
well. Centerlen continues to accept more
traditional forms of payment, including
cash, major credit cards and PayPal.
As a person-to-person, decentralized currency, Bitcoin allows its users to make instant
payments. “I’ve been doing some reading on
it and I think it’s a neat idea,” Webb told the
Business Journal. “The way we have it set up
is we can accept it, but we have it converted
into U.S. dollars right away.”
The transaction fee for Bitcoin payments
is less than half the price for credit card processing, Webb explained. “We’re a small
business here and, by year end, if you added
up our credit card transaction fees, we could

easily hire another employee,” he said.
“When this concept came up, we thought we
should try it. It’s going to take a while to get
going. But I think once people start dabbling
into it, it will be the way of the future.”
Another upside to using Bitcoin, Webb
said, is the ease with which to conduct
international orders. “The paperwork, the
delay of time to transfer the currency to our
bank account from their bank account is
significant,” he said. “With Bitcoin, we
wouldn’t have that dilemma. It would just
be a person-to-person transaction.”
Bitcoin was the first cryptocurrency, or
digital medium of exchange. There are
about 60 different cryptocurrencies on the
market today, most of which are modeled
after Bitcoin. The market value of Bitcoin
hit above $1,200 last year and hovered
around $680 mid-February. This time last
year Bitcoin was trading for a mere $30.
Meetup groups, nonprofit organizations
and conferences on Bitcoin have been popping up as the currency gains momentum.
The North American Bitcoin Conference,
held in Miami Beach last month, generated
interest from speculators, enthusiasts, business users and politicians. The event
included workshops for merchants and
exhibited Bitcoin startups, whose founders
shared innovations in payment, deposit and
trading transactions.
With the Bitcoin hype, there has been
pushback. Some domestic and international regulators have put up a front against
Bitcoin. Indonesia has banned the use of
the digital currency. Finland’s central bank

does not recognize Bitcoin as a currency
and neither does the central bank in
Norway. China’s central bank has banned
lenders from accepting any cryptocurrency.
Many corporations have also taken a
stance against Bitcoin. Apple eliminated all
digital wallets for Bitcoin from its application store. More corporate efforts against
Bitcoin could pop up if it does not meet the
three distinguishing features of currency.
According to global investment management firm Payden & Rygel, currency is
distinguished as a liquid medium of
exchange that must maintain a store of
value and qualify as a unit of account.
Even at this early point in Bitcoin’s
potential lifespan, the currency meets the
first distinguishing feature standard. In
terms of holding value over time, Bitcoin is
designed to be finite. However, each unit of
Bitcoin is designed with eight decimal
places to allow its holders to trade at fractions of a Bitcoin. This, according to
Payden & Rygel, helps fend off concerns
that Bitcoin is a deflationary currency.
The final feat for the digital currency
would be making it commonplace to quote
commodities in units of Bitcoin, as opposed
to pricing in U.S dollars. Though Bitcoin
attaining that level of popularity may seem
out of reach, regulators acknowledge its
potential by working now to address its use.
New York’s top bank regulator plans to
develop financial services licenses that tailor specifically to virtual currencies – a
“BitLicense” – to help avoid money laundering. California may see similar regulation of Bitcoin as well.
If passed, Assembly Bill 129, amended
in the California State Assembly last
month, would redefine lawful money to
include alternative currency such as
Bitcoin. It would not require individuals or
businesses to accept alternative currency.
However many stumbles it may have
along the way, Bitcoin is exemplifying the
future of currency. How soon its use
becomes more commonplace in the Long
Beach area remains uncertain.
“So far we’ve had a few inquiries about
using Bitcoin,” Webb said. “For the most
part, it’s the competition asking us about it.
It’s quite the topic of conversation.” ■

U.S. Debt Limit
Analysis:
Peering Through
The Ceiling
■ By TIFFANY L. RIDER
Editor
In a stop-and-go fashion for nearly 100
years, funding for approved federal government programs is temporarily stalled
because of a cap known as the debt limit.
According to the U.S. Treasury, the debt
limit is the total amount of money that the
federal government is authorized to borrow
to meet its legal obligations – Social
Security, Medicare benefits, military
salaries, tax refunds, interest on the
national debt and other approved programs.
Raising the debt limit allows the federal
government to continue to fund programs it

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 15

FINANCIAL SERVICES INDUSTRY
February 18-March 3, 2014
does not have revenue to pay for. It is commonly mischaracterized as acting like a credit
card; however, it does not allow the government to create new spending programs.
The U.S. Congress has temporarily
extended, revised the definition of or raised
the debt limit a total of 78 times since
1960, according to the Treasury. Debt ceiling drama in 2013 included suspending the
debt ceiling in February, reinstating it in
May and, just a day before hitting the ceiling in October, once again suspending the
debt limit through February 7, 2014.
Treasury Secretary Jack Lew announced
in early February that the federal government’s borrowing authority must be
extended by the end of the month, or else
risk defaulting on payments due in March.
As part of its “special accounting maneuvers” to postpone default, the Treasury suspended the sale of state and local government nonmarketable securities effective
February 7 until further notice. The suspension helped the Treasury manage the debt,
subject to the limit, until Congress could
come together on a vote to raise the limit.
Congressman Alan Lowenthal, who
represents Long Beach as part of
California’s 47th Congressional District,
was part of the 221 U.S. House of
Representatives votes cast on February 11
in favor of raising the debt limit. “The full
faith and credit of the United States
would have been in jeopardy after
February 27 if both the House and Senate
did not agree to raise the debt ceiling,”
Lowenthal said in a newsletter statement
to his constituents.
The U.S. Senate approved an increase to
the debt limit the following day to meet the
federal government’s financial obligations
through March 2015 without conditions,
providing a year free of debt limit drama.

Long Beach Business Journal 15
Research Service.
Though it had been brought down to
about 45 percent of GDP in 1941, the federal debt spiked above 120 percent of GDP
by 1946. The years 1946 through 1950 are
the top five years with the highest national
debt to GDP ratio on record, according to
data from the Council on Foreign
Relations.
Over the next 35 years the government
brought down the debt, and then President
Ronald Reagan brought it back up to more
than 50 percent of GDP in the 1980s due to
Cold War spending. Gross debt was on the
decline in the late 1990s, but began to rise
again in the early 2000s to more than 60
percent of GDP.
Today, through spending to fight the war
on terror and to fund a massive bailout for

financial institutions after what is now
known as the Great Recession, the federal
debt is at about 75 percent of GDP, or
approximately $17.2 trillion.

A Political Theater Prop?
The U.S. is one of the only developed
economies that has a debt ceiling. Another
is Denmark, though their government sets
the limit so high that it is rarely – if ever –
reached.
According to Eduardo Martinez, economist with Moody’s Investors Service,
“There really isn’t a good argument to have
a debt ceiling. It’s an unneeded exercise that
we force ourselves to go through, as long as
we’re going to have a 50-50 government.”
Most mainstream economists, those
slightly to the right or to the left, agree that
the debt ceiling really has no purpose with an

economy this size, Martinez affirmed. Just
as a business doesn’t have 100 percent cash
on hand to pay accounts, he explained that
the federal government has to borrow to pay.
“It’s not going to be nice and even, in terms
of revenues and expenditures,” he said.
In those terms, the debate over raising
the debt limit becomes sort of old hat.
“Democrats voiced concerns over
[President] Bush going over the debt limit,”
Martinez said. “Now Republicans voice
concerns over the Democrats going over
the limit. Most politicians realize that we
can’t afford to start missing payments. . . .
A lot of people would argue that, in the
world financial system, U.S. bonds and the
dollar are good assets. It’s bad we repeat
ourselves, but the market really shrugs it
off. We’re not close to a point yet where

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We believe in being fully engaged with our business customers
and taking the time to understand their needs—it’s a partnership
based on trust, integrity and personal involvement.

A History Of Debt
When federal debt was first incurred in
1789, there was no limit. U.S. Treasury
Secretary Alexander Hamilton refunded
the debts of the Revolutionary War using
his experience in refinancing he learned as
a banker. That debt was about 30 percent of
the nation’s gross domestic product (GDP).
In 1835, President Andrew Jackson
announced the federal debt had been paid.
It was the only debt-free year on record.
The Civil War was the next major debt
incurrence and, when refinanced, again
equaled about 30 percent of the GDP. The
Civil War debts had been mostly paid down
by the turn of the 20th century, but surged
back up to about 30 percent of GDP after
World War I.
It wasn’t until passage of the Second
Liberty Loan Act of 1917 to fund WWI
that a limit was placed on various Treasury
bonds issued. This was the first act of limiting the debt.
More debt accrued when President
Franklin Roosevelt leveraged debt refinancing to help the economy recover from
the Great Depression of the 1930s. His
effort boosted the federal debt to 40 percent of GDP. State and local governments
followed, bringing the total government
debt to 70 percent of GDP.
World War II took the nation’s debt to a
whole new level, though it was in 1939 that
Congress imposed what is known today as
the debt ceiling – a limit on all debt instruments, according to the Congressional

Question: What is your understanding of the role of the Long Beach City Attorney? What experience (such as trial experience,
managing other attorneys, previous work for a law firm), do you believe is necessary for that individual to do a good job?
DAMON DUNN

T

he
City
Charter
lays out the
duties:
(1)
legal advisor to
the City and its
bodies,
(2)
draft all ordinances and legal
documents, (3) attend all legal
proceedings (4) defend all lawsuits, (5) approve all bonds and
contracts, and (6) investigate and
enforce the Charter, ordinances,
and applicable laws.
Further, the decisions made by
the City Attorney can have a
broad impact on job creation.
The City Attorney helps determine the legal environment in a
community by which lawsuits
they seek to pursue, which cases
are settled, and how they conduct
their duties. This in turn plays a
major role in how small businesses and other employers view
Long Beach. Are we a City that
spends legal resources on paperwork violations and nuisance
lawsuits or a City that ensures
government is working efficiently and fairly and that residents and businesses have a safe
place to live and work? This
answer adds greatly to our ability
to grow the jobs we so sorely
need.
This office needs to function
in a dual role, as a public sector
legal advisor to the City and its
agencies and as a private sector
corporate counsel to our many
enterprise funds—the Port, oil,
airport, gas utility, SERFF, and
others. The enterprise funds
need to operate efficiently as
businesses that generate jobs
directly, and indirectly through
the competitive edge these
resources give our community.
Finally, lawyers tend to be of
two types—lawyers who tend to
find the reasons not to do something and lawyers who are able to
find legal avenues to allow a
community to reach its goals. In
my workings with cities, my
unfortunate experience is that
government lawyers are too often
of the first type. It’s too easy for
the typical government lawyer to
fold under the sheer weight of
the massive rules, regulations,
and restrictions imposed on
cities by both the state and federal governments. As a Charter
City, our community has constantly found creative paths to
resolve its problems and reinvent
its economic future. The City
Attorney needs to be an individual who can continue the same
innovative spirit. ■

ROBERT GARCIA

I

've worked
closely over
the last five
years with the
City Attorney’s
Office. I have
also had the
opportunity to work with the talented team of Deputy City
Attorneys and legal professionals
we have working for the City of
Long Beach.
The City Charter specifies that
the City Attorney is “the sole and
exclusive legal advisor of the
City, the City Council and all City
commissions, committees, officers and employees.” To put it
simply, it is the role of the City
Attorney to uphold the City
Charter and advise City officials
and employees on policy, laws
and ordinances.
The City
Attorney also defends the City in
court when legal matters arise.
The City Attorney is critical to
the policy making process. As
Vice
Mayor
and
a
Councilmember, I have relied on
the City Attorney to assist and
give advice in crafting local ordinances and policy. It is essential
that the City Attorney also provide the Mayor and Council with
sound and well researched legal
advice on cases before the city
and on numerous issues related to
the port, real estate, public safety,
and development.
I believe that a qualified candidate for City Attorney will have
experience in municipal law,
understand the charter, and have
litigation and management experience. It is also critical that the
City Attorney be a person of
strong moral character. The City
Attorney must also show a commitment to Long Beach and to
working with the City Council,
Commissions, and City Staff. ■

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BONNIE LOWENTHAL

T

he role of
the
City
Attorney
in
Long Beach is
to represent the
City and all of
its departments,
commissions and officers in all
municipally-related
matters.
Providing advice and counsel to
city officers and defending the city
in litigation are the City Attorney’s
primary responsibilities. But he/she
is also responsible for hiring and
overseeing any outside legal firms
brought in to handle highly specialized litigation; drafting ordinances,
resolutions, charter and municipal
code amendments; promulgating
ethical standards and training for all
city officers and employees; and
writing and administering contracts
relating to public improvement
projects and ordinances related to
the collection of revenues.
Long Beach is unique; we have a
major port generating billions of
dollars, a commercial airport, a
municipal oil production company,
and gas, health, and water departments. Our City Attorney must be
well-versed in issues spanning all
of these complex functions. He/she
must be familiar with the power
and limitations of the “regular” city
services that the city provides its
residents. For instance, regulations
must be drafted and administered
with regard to street use, parks,
public health, and zoning matters.
The person who is responsible
for leading our City Attorney’s
Office should be of unquestioned
ethical character. On occasion, it
is incumbent on the City Attorney
to offer unsolicited legal and ethical advice if he or she observes
actions or activities that are likely
to cause harm to the city or individuals who represent the city.
Of course, our City Attorney
must have an extensive litigation
background and experience practicing municipal law. But even
being the best litigator or most
experienced litigator is not
enough. Litigation is often a zerosum game: even when the city
wins a lawsuit it often has to
expend significant sums in litigation preparation; it is generally
very time-consuming and distracts
city employees, who are required
to participate, from dedicating
their attention to their regular city
responsibilities. Our City Attorney
must take a proactive approach to
their advisory function by sensitizing city management on how to
avoid litigation. The City Attorney
should bring people together and
engender confidence in his/her
legal analysis and opinion. ■

DOUG OTTO

T

he job of
the Long
Beach
City
Attorney is one
of the most
complex jobs
any
attorney
could undertake. This is because
the breadth of responsibilities that
the Long Beach City Attorney’s
Office has exceeds similar jobs in
almost all other cities. To be truly
successful, the elected City
Attorney should have a diverse
background in many of the areas
for which the City Attorney’s
Office is responsible. Those areas
include the following:
a) The City Attorney investigates and handles all liability, contract, and workers comp claims.
b) The City administers and
maintains the State’s coastal tidelands in Long Beach, including
beaches, piers, marinas, the
Convention Center, and an aquatic
complex, all in conformity with
the “tidelands trust” doctrine.
c) The City operates the
nation’s second busiest port.
d) The City Attorney drafts and
approves all city contracts, and
all city contracts must be
awarded by a formal bid process.
e) The City operates a robust
program for the exploration and
production of hydrocarbon products and a large natural gas field.
f) The City Attorney has regulatory responsibilities in the areas
of land use, zoning, building
codes, public safety, traffic, public nuisance, waste management,
and environment matters.
g) The City Attorney administers a Civil Service System and is
responsible for labor relations
with all city employee unions.
h) The City operates the
Southeast Resource Recovery
Facility (SERRF) with statemandated solid waste reduction
requirements.
i) The City Attorney oversees
elections, including fundraising,
and adopts rules and regulations
that establish electoral districts.
j) Finally, the City Attorney
serves as the sole and exclusive
legal advisor and representative
for the City, the City Council, and
all city commissions and boards.
It is difficult to say what requirements there should be for an individual to run for the office of City
Attorney. A minimum of five years’
experience in municipal law, not
just the practice of law, should be
required, given the breadth of
responsibilities of the City Attorney.
The job of the City Attorney
requires so much legal and political
acumen that, perhaps, the position
should be appointed, not elected. ■

GERRIE SCHIPSKE

T

he
City
Charter is
quite
clear
about the role
of the Long
Beach
City
Attorney: To be
the sole and exclusive legal advisor of the City, the City Council
and all City commissions, committees, officers and employees
with reference to all of their functions, powers and duties under
this Charter, State and Federal
law; To draft all ordinances, contracts, and other legal documents;
To attend to all suits, matters and
proceedings in which the City
may be legally interested; To
defend all suits for damages instituted against officers and employees and former officers and
employees for acts performed by
them in furtherance of their duty
while in the employ of the City;
To approve in writing the form of
all bonds required by the City and
all contracts before the same are
entered into on behalf of the City;
To investigate and enforce on
behalf of the City all provisions of
this Charter, of the general law
applicable to municipal corporations, and of the ordinances of the
City, in all courts in the State of
California, except criminal cases.
Because of the multiplicity of
City services and departments
(i.e. Gas, oil, water, airport, port,
general City), the Long Beach
City Attorney must be experienced in these areas, which in
reality requires more than the
minimum five years of practice
that is required by the City
Charter.
Long Beach has been fortunate
to have stability in the Office of
City Attorney. More importantly,
the voters have elected those
attorneys who have worked their
way up through the office, bringing with them a wealth of experience and knowledge that has
served the City well. ■

See PoliticalWire
News on Page 18

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 17

POLITICALWIRE – LONG BEACH MAYORAL RACE
February 18-March 3, 2014

Long Beach Business Journal 17

Question: Several years ago, the city’s Economic Development Bureau was eliminated.
Should the Bureau be reestablished? If so, why and under what format? If not, please explain why.
DAMON DUNN

C

reating
jobs and
building longterm economic
growth in Long
Beach is such
an important
goal that it needs to be the
responsibility of the Mayor to
advance it. As mayor, I will
become the city’s number one
champion for job growth – dedicating staff to economic development, meeting with employers,
advancing reforms, and calling
on city departments to make creating jobs easier in Long Beach.
By vesting this responsibility in
the mayor’s office, voters will
know who to hold responsible for
success or failure.
In my private career, I worked
with cities to create jobs and
grow revenue – property tax,
sales tax and business tax revenue. We can do some amazing
things in Long Beach if we think
creatively, act decisively and prioritize job creation. Leadership
must start at the top to break
down institutional barriers that
stop the city’s management from
being entrepreneurial.
The fact is, we have departments and agencies that work
with businesses every day. We
have our enterprise funds which
give our community unique
competitive advantages that
when broadly promoted, become
phenomenal engines of job
growth. We have underutilized
properties and assets throughout
the City that if properly marketed and developed, can generate the needed jobs to benefit all
our neighborhoods.
The City agencies need to recognize that they are the Long
Beach economic development
agency. How they deal with businesses, how efficiently and costeffectively they provide their services determines how businesses
large and small view our community as a place to invest and a safe
and welcoming place to grow jobs.
How the enterprise funds operate determines whether we are
gaining the greatest economic
boost possible from these assets.
And the Mayor’s Office needs
to be the point where this economic development perspective is
maintained and applied. In previous editions, I’ve written how I
believe a Mayor needs to be a catalyst. In this case, that catalyst
role needs to function as the point
that brings together the resources
and advantages Long Beach has
to offer with the employers who
can grow the jobs we need. ■

ROBERT GARCIA

R

estoring
t h e
Economic
Development
Department will
be one of my
top priorities as
Mayor. In 2012, I successfully led
efforts to hire an Economic
Development Officer to begin
rebuilding the department. The
new department head should report
to the city manager and maintain
strong relationships with the business community, port officials, and
members of the community.
The
New
Economic
Development Bureau should focus
on key sectors including trade and
transportation, technology, green
development, healthcare, aerospace, and the creative economy.
As our national economy
rebounds, it is essential our port
remain the competitive global
force it is today. We must remain
aggressive to recruit new port
partners and attract the best companies. We need to grow in new
markets beyond China and begin
to make a serious effort in South
America. If we get serious about
expanding our import portfolio,
we could see incredible results.
Long Beach can become the
Silicon Valley of the South with the
right leadership and an aggressive
approach to business recruitment.
We have a Downtown by the water,
transit into downtown Los Angeles,
and great schools and weather. We
need a strong plan to recruit high
tech companies and venture capital.
We must also lead Long Beach
into a new Blue & Green
Economy, focused on green
development, sustainable buildings, solar projects, and opportunities along the coast for aquatic
recreation and tourism. New
developments should be green
and community-oriented. We
need to encourage green tech
zones and support efforts on
expanding solar initiatives.
We also have incredible opportunities to grow and foster the creative economy. We need to
encourage more jobs in the arts,
design, and entertainment.
If Long Beach is going to continue to thrive and grow, new economic activity, including the development of real estate, is essential. To
support this critical part of our economic health, we must speed and
streamline the development process.
While progress has been made, we
have much more work to do to make
this process more business friendly.
I am looking forward to our new
Economic
Development
Department leading the way and
bringing business to Long Beach. ■

BONNIE LOWENTHAL

A

bsolutely.
L o n g
Beach is ideally
located to serve
as a regional
hub and innovator in economic
development. It’s time to make
the most of our assets and bring
businesses and good jobs back to
Long Beach and keep them here.
Reestablishing the Economic
Development Bureau (EDB) is a
good way to start.
The focus of the EDB must be
retention. We cannot grow if we
are losing our current businesses.
The bureau, which should consist
of at least three individuals, has to
first assess our current business
climate to understand those
industries at risk, where we can
grow, and where we are thriving.
If we want to see sustainable
growth in our local economy, we
have to be proactive. With a
robust EDB, we can reestablish a
Red Team for Long Beach, similar to our Red Team for the C-17,
to aggressively pursue industries.
We can liaison with the Los
Angeles County Economic
Development Corporation. We
can work with the state to leverage incentives through GO-BIZ,
including new tools that go
beyond the old restrictions of
enterprise zones. We now have
sales tax exemptions for manufacturing and biotechnology equipment and hiring credits for middle
class jobs, as well as some promising proposals on the horizon to
expand the use of infrastructure
financing districts which would
give Long Beach the tools to
finance projects for affordable
housing, transit, and other projects. We can build the EDB as a
hub to assist with business loans,
create and maintain existing business improvement districts, and
help new businesses establish in
our city.
Of course, economic development and community development go hand-in-hand. With a
strong business community our
ability to provide better neighborhood services grows. We can’t
forget the role that our community plays in luring and retaining
businesses. It’s not just the economic incentives, it’s our quality
of life and it’s uniquely Long
Beach. Our arts and culture,
neighborhoods, schools, and
parks can be magnets for businesses looking to build a future in
our city. We need to brand Long
Beach as a destination for innovation, the arts, and world-class
industries. ■

DOUG OTTO

T

o be a successful city,
Long
Beach
must be a prosperous city, and
that means making business and
job growth our top priority. In
these difficult economic times, it
was an enormous mistake to eliminate the Economic Development
Bureau. We are the only major city
in America without an EDB. The
reasons the bureau should be reestablished include the following:
a) We have fewer jobs in Long
Beach than in 2000.
b) Our December 2013 unemployment rate was 9.7% – which
is 16.9% greater than California’s,
and a whopping 44.8% greater
than the nation’s.
c) Our poverty rate is 19.9%
greater than that of L.A. County,
and almost 33% of our children
are living below the poverty line.
This has a corrosive effect that we
must correct by focusing on job
and business growth.
Goal 5 of my Jobs Plan (found at:
www.dougottoforlongbeach.com/j
obs_plan) calls for restructuring
the City’s economic development
efforts in two primary ways. If
elected Mayor, I will quickly
request the City Council and City
Manager to do the following:
1) Create an Economic
Development Bureau with core
functions currently dispersed
throughout city departments which
will also unify and coordinate economic development efforts – from
Workforce Development to
Business Improvement Districts.
2) Create a city-sponsored, nonprofit entity with private sector
drive and ideas, coupled with public
sector responsibilities that can take
the lead to promote economic prosperity. While some current city
functions could be transferred to
this new entity, accountability
should remain at the public level.
The functions transferred to this
new entity would include Business
Improvement Districts, Filming and
Special Events (the income from
which could pay for the entity),
Business
Loan
Programs,
Marketing, Economic Data and
Economic Impact Analysis, Property
Disposition, Cultural Affairs and
Special Projects designed to further
make our city prosperous.
I am the only candidate with a
detailed action plan for jobs and
business creation. To me, that’s
revealing. It’s my priority and should
be the priority of the City. City Hall
should invest in what matters to
Long Beach residents – jobs and
business creation, not ribbon-cutting
monuments to elected officials. ■

GERRIE SCHIPSKE

W

e need a
C i t y
Manager who is
a warrior for
bringing economic development and a
Mayor and City Council that will
support the efforts with appropriate budgeting.
I am the only member of the
City Council that sits on the Los
Angeles Economic Development
Corporation’s L.A. Jobs Defense
Council which is working on a
series of initiatives to bring and
keep good paying jobs in our area.
I am stunned by the lack of participation by any other representative or staff from the City of Long
Beach. LAEDC offers a variety of
resources to assist in economic
development and it is unbelievable that Long Beach does not
fully participate.
A year ago, I proposed that the
City of Long Beach contract with
the LB Chamber of Commerce to
assist on economic development.
However, the item was withdrawn
because the Chamber felt that the
animosity between the Chamber
and the current Mayor would
make such a partnership difficult.
In looking forward, we might
take our cue as to what a City can
do about economic development
by looking at the City of San Jose
which takes a five pronged
approach of coordinating: an
Office of Cultural Affairs to promote the arts; Assistance to
Business which provides services
and information for small businesses
and
entrepreneurial
growth; a Real Estate and Asset
Management office that manages
the acquisition and valuation of
City owned property; and
Workforce Development to provide workforce development services to businesses and job seekers.
Additionally, we need to establish a citizen/expert advisory
committee to the Mayor on economic development. This should
be comprised of local business
leaders, investors, and entrepreneurs who can help guide the City
in doing what is necessary to spur
economic development.
Finally, the City pays into the
California Public Employees
Retirement System (CALPERS)
$94 million each year and has
$3.1 billion in assets in
CALPERS, which invests these
assets throughout the US and
globally but not in Long Beach.
The City of Long Beach needs to
encourage economic investment
back into our City and work with
local businesses to apply to
become
the
recipient
of
CALPERS investments. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 18

POLITICALWIRE NEWS
18 Long Beach Business Journal

February 18-March 3, 2014

(Continued From Page 1)

before running for the city’s highest
office.
Dunn moved to Long Beach in 2011 and
in late 2012 was the first to announce a run
for mayor. Soon after, he began walking the
city and, according to him, knocking on
thousands of doors – long before any other
mayoral candidate began campaigning.
Many well-connected members of the community dismissed him because he went
from a Democrat to a Republican to an
Independent and, despite failing to vote
over the years, ran unsuccessfully for secretary of state (which oversees statewide
elections). Some people claimed he relocated to Long Beach at the behest of
“Long Beach Chamber-types” to specifically run for mayor – a charge both Dunn
and the chamber deny. The chamber, however, endorsed him last June, long before
the field for mayor had been finalized.
Despite all the knocks on him, Dunn is
young (born in 1976), well educated
(Stanford University grad), athletic (four
years on the football team, lettered in track
and a short stint in the National Football
League) and an articulate speaker with a
good story to share (from poverty in Texas to
becoming wealthy through real estate). He
joined the top ranks of the mayoral candidates because of money. By June 30, 2013,
he had accumulated more than $240,000 in
campaign contributions, including $125,000
of his own money. By the end of 2013,
Dunn, according to city records, had spent

nearly $245,000 on his campaign – more
than double that of any other mayoral candidate. An independent expenditure (IE) group
formed through the chamber political action
committee spent another nearly $40,000 on
mailings pushing Dunn.
Historically, the firefighters work hard
for candidates they endorse. It’s not just
writing a check or sending out mailers.
They walk the neighborhoods, talk to voters and make the phone calls. The firefighters, along with the Long Beach Police
Officers Association (POA), are considered the two most influential organizations
in the city come election time, and thus the
two most sought-after endorsements.
Voters tend to trust an endorsement from
“their” police officers and firefighters
more than one from a business group, outof-city union or even an elected official.
Thus, the backing by Local 372 could
prove pivotal. The POA is not, according to
its president, Steve James, going to endorse
in the April 8 primary.

How They Stand Seven Weeks Out
Following is how the Business Journal
sees the mayoral race as of mid February.
This is based on conversations with dozens
of people throughout the city representing
a cross section of the community.
Up until the firefighters’ endorsement,
most political observers seemed to agree
that the two candidates with the best
chance of making it to a June runoff were
Bonnie Lowenthal and Robert Garcia, with
Gerrie Schipske an outside shot of passing

Garcia. Dunn and the other top contender,
Doug Otto, were pretty much relegated to
finishing no better than third.
Why? The Lowenthal name is golden in
Long Beach. Many voters who don’t know
all the candidates will side with a
Lowenthal. Bonnie Lowenthal also has the
backing of the California Democratic Party
and L.A. County Democratic Party, which
is significant in a city heavy with registered
Democrats. Garcia gets a runoff nod
because he holds the title of vice mayor, is
young and energetic, and to many represents the growing creative, tech-savvy,
young entrepreneurial sector in Long
Beach. While Lowenthal often comes
across as drab and boring (watch some of
the debates), Garcia is upbeat and enthusiastic. Both have received strong financial
support, have plenty of cash on hand and
can count on heavy IE spending.
One big question that opens the door for
the other three is, how well known is Garcia
outside of the downtown area? He’s never
run for a citywide seat and has been tested
only in the 1st Council District, where the
most votes he received in two races was
1,168. That fact alone is what gives Schipske
a chance, who received four times that many
votes winning her district in 2010. Over the
years, she’s run in at least a dozen races in
the city, has strong name identification, and
is well liked in her 5th City Council
District – which historically turns out more
voters than three other districts combined –
although new registration in Long Beach is
primarily downtown and the Westside,
which helps Garcia. Another edge for her is
that her name appears first on the ballot.
The problem for Schipske is a lack of
money. As of the end of 2013, she had
raised less than $60,000 in cash contributions, with about $30,000 cash on hand.
While the odds are against her, don’t be too
surprised if she beats Garcia in votes. The
more money she raises, the better her
chances are of passing Garcia.
A criticism heard of both Lowenthal and
Garcia is that neither has a strong enough
personality or take-charge attitude to run
the city, and that they could be controlled
by other people. Schipske, on the other
hand, as she has shown repeatedly during
city council meetings, doesn’t back down
from a good fight. This assessment of the
three, whether accurate or not, is out there in
the community – which benefits Otto, a
defense attorney by profession, the most.
The roadblock for Otto is Dunn. Those
who support Dunn would most likely support Otto if Dunn were not in the race.
PoliticalWire has spoken with many individuals who back Dunn who admit Otto
would otherwise be their clear choice. They
cite Otto’s several decades of work in supporting a variety of city issues and needs –
from the arts to education to planning to
the nonprofit sector and much more. Otto
has proven his resourcefulness to residents
and elected officials time and again (he’s
been the go-to guy for numerous task
forces and committees), a fact no one can
dispute. The hesitation? His health. Several
years ago, Otto beat back cancer. He says
he’s in great shape and that his doctors
back him up. Still, there are doubters.
Otto has probably logged more volunteer
hours to help the city than all of the other
mayoral candidates combined. That’s why

City Council 7th District
• March 3 – 7 p.m., Veteran’s Park Social
Hall, 101 E. 28th St. Host: The Wrigley
Association. LBWrigley@yahoo.com.

City Council 9th District
• February 24 – 6-8:30 p.m., American
Legion Hall, 1215 Orange Ave. Host:
North Long Beach Neighborhood
Association.
he has raised quadruple the money Schipske
has (the other home-town product) and,
from a review of contribution statements,
appears to have the most “local, homebased” support (money donated by Long
Beach residents) of all the candidates. There
seems to be agreement that if Lowenthal finishes on top in the primary, Otto would be
her toughest opponent in a runoff.
The same scenario would not play out
for Dunn if Otto were out of the race. Otto
supporters are much more diverse (due to
Otto’s decades of involvement) and their
support would spread equally among the
other candidates if Otto were not running.
In backing Dunn, Pritchard said,
“Damon Dunn is committed to making
Long Beach an even safer place to live and
work, and understands that restoring
staffing levels for police and fire are vital
in helping us improve response times. . . .
When you listen to Damon Dunn, you learn
quickly he fully understands the city’s fiscal situation and has a clear transparent
path to move Long Beach forward, while
maintaining a balanced budget.”
Like many in the community, the firefighters are looking for a new direction.
One advantage for Dunn is that he is a fresh
face who has not served in a local elected
office as have the other four: Garcia and
Schipske are current councilmembers;
Lowenthal is a member of the state assembly who previously served as a councilmember and school district boardmember; and Otto is on the city college board of
trustees, which distances him from being
included in “city hall types.”
This mayoral election could play out
similar to the race of 20 years ago when
Beverly O’Neill, the president/superintendent of Long Beach City College, was considered the “fresh face” in the election. Up

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 19

POLITICALWIRE NEWS
February 18-March 3, 2014
against several long-time politicians,
including the incumbent mayor, voters saw
her as representing a new direction. In a
very close race, where only seven percentage points separated the top four finishers
and the incumbent mayor finished fifth
with 10.5 percent of the vote, O’Neill
bested a primary field of 13 candidates.
The 2014 mayoral election should prove
equally close, and, despite this analysis,
any of the top five candidates are capable
of winning – or finishing in fifth place.

Voter Turnout Huge Factor As
Registration Numbers Shift
Turnout is always a factor, not only in the
total numbers of people voting, but where
they live in the city.
For that 1994 primary mentioned earlier,
49,932 votes were cast for mayor out of a
registration of 179,171 voters – a healthy
28 percent turnout. The 3rd and 5th City
Council Districts accounted for nearly half
(46.2 percent) of all votes cast for mayor.
How times change.
As of October 2013, the number of registered voters is up to 256,316 and it’s
expected to grow. A similar percentage
turnout to 1994 would equate to more than
72,000 votes cast. But unlike 20 years ago,
the 3rd and 5th Districts may not dominate
turnout. The number of registered voters in
those Eastside districts is up 16 and 15 percent, respectively, but look at the increases
for the other districts: 1st District, 124 percent; 2nd District, 63 percent; 4th District,
25 percent; 6th District, 78 percent; 7th
District, 97 percent; 8th District, 29 percent; and 9th District, 47 percent.
While numbers provide a historical perspective, the higher registration downtown, on the Westside and North Long
Beach don’t necessarily translate into people actually voting – although unions are
expected to play a key role in turnout in
those areas. Because the city leans heavily
toward registered Democrats, the higher
the turnout, the better it is for Lowenthal,
Garcia and Schipske. The fact that there
are competitive races in the 3rd and 5th
City Council Districts help Schipske (in
the 5th), Dunn and Otto.

Candidate News
• Damon Dunn: The mayoral candidate
was endorsed by retired police commander
Charles Parks.
• Robert Garcia: The mayoral candidate
fell just shy of receiving the endorsement of
the Long Beach Democratic Club. Garcia
received 58 percent of the 138 votes cast,
with Bonnie Lowenthal receiving 42 percent. Garcia was endorsed by United
Association Local 250, a building trade
union. In a February 4 press release, Garcia
claimed he: raised the most money of any
candidate during the reporting period
($206,641.11 July 1-December 31); had the
most cash on hand ($165,308.98); had more
donors than any other campaign (669); and
had more contributions of under $100 (319).
• Bonnie Lowenthal: The mayoral candidate was endorsed by the Los Angeles
League of Conservation Voters.
• Charles Parkin: The city attorney candidate was endorsed by Los Angeles
District Attorney Jackie Lacey, former governor, George Deukmejian and 3rd District
Councilmember Gary DeLong.
• Rex Richardson: The 9th District
City Council candidate was endorsed by

Council District 1; Joan Greenwood in
District 7; and Rex Richardson in District
9. Its website is: http://angeles2.sierraclub.org/longbch/.
• Jeff Kellogg: The Long Beach
Community College Board of Trustees
1st District candidate and current president of the board has been endorsed by
former governor George Deukmejian;
former mayor and city college president
Beverly O’Neill; L.A. County Supervisor
Don Knabe; Councilmembers Al Austin
and Steve Neal; School Boardmember
Mary Stanton; and College Trustee
Roberto Uranga.
• Megan Kerr: The 1st District Board of
Education candidate was endorsed by the
National Women’s Political Caucus of
California and UNITE HERE Local 11.

• Uduak-Joe Ntuk: The 1st District
Board of Education candidate was
endorsed by the Service Employees
International Union Locals 99, 721, 1000,
ULTCW, HWW, USWW and State
Council. He was also endorsed by the
American Federation of State, County and
Municipal Employees District Council.
• Juan Benitez: The 3rd District Board
of Education candidate was endorsed by
Vice Mayor Robert Garcia, the California
School Employees Association and State
Senator Ricardo Lara.
• John McGinnis: The incumbent 3rd
District Board of Education candidate
was endorsed by former state superintendent of public instruction Delaine
Eastin,
and
Signal
Hill
City
Councilmember Larry Forester. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 20

ENCORE – PEOPLE IN THE NEWS
20 Long Beach Business Journal

February 18-March 3, 2014

City Prosecutor’s Annual IMPACT Awards

Long Beach City Prosecutor Doug Haubert presented his annual IMPACT awards February 11 to six individuals and groups who “in working with the City Prosecutor’s Office, have made ‘a positive,’ significan
impact in the City of Long Beach in the past year.” The event was held at Gladstone’s restaurant at Rainbow Harbor. Honored were: the Long Beach Police Department (LBPD) Vice Division “for the entire team’s
success in investigating cases of human trafficking and assisting victims;” Gabby Guillen and Marvin Kelly for “their assistance in helping former Long Beach gang members with free tattoo removal;” Leilani
Ronca, code enforcement officer for the city’s neighborhood services bureau, for her “personal efforts to eliminate blight and abate public nuisance properties;” Tiffany Brown, the school district’s director of
coordinated student services, for her “efforts to work with city prosecutor staff to reduce chronic truancy in Long Beach;” LBPD police officers David Corcoran, Jeannie Villanueva, Gabriel Carrillo, Carlos Del
Real and Pedro Valenzuela for their efforts, “which individually and collectively resulted in the successful arrest and prosecution of a gang-related hate crime;” and Jessica Quintana, Pastor Wayne Chaney, Jr.,
and Pastor Gregory Sanders for their “assistance with developing and implementing ‘Operation Opt Out,’ a city prosecutor program assisting persons formely associated with street gangs.” Pictured, left to
right, are: Carrillo; Del Real; Villanueva; Valenzuela; Haubert; Lt. Dan Pratt of the LBPD Vice Division; Quintana; Guillen; Sanders; and Chaney. (Photograph by the Business Journal’s Thomas McConville)

New Dean At Long
Beach City College –
Kenneth J. Starkman has
been appointed dean for
the School of Career
Technical Education at
Long Beach City College.
He is responsible for overseeing the college’s 38 technical instructional programs.
Starkman previously served as dean at
Madison Area Technical College in
Wisconsin, and as a state supervisor and
educational consultant with the Wisconsin
Department of Public Instruction. “My
goal is to support programs that are in
place, while developing new programs with
greater effectiveness in areas where the
market is in need of qualified individuals,”
Starkman said in a statement. “There is a
great team already in place at LBCC to
move the CTE programs to the next level
and I look forward to working with faculty
members, local industry and corporate
partners to advance our programs.”
New Partner At Windes –
Gary Curtis has been
appointed a partner in the
tax and accounting services
practice at Windes, an
audit, tax and advisory firm
based in Long Beach.
Curtis, who is working from the firm’s Irvine
office, has more than 30 years of professional experience, including serving as a
director at Deloitte and managing director at
KPMG. He most recently served as a corporate tax partner at Haskell & White. Curtis
earned his bachelor’s in accounting from
Phillips University in Oklahoma. “I am very
excited to join Windes, as the firm has a stellar reputation and I believe I can contribute
to the continued success of the organization,
Curtis said in a statement.
New
Environmental
Planning Director For
Port – Heather A. Tomley
is the new director of environmental planning for the
Port of Long Beach. She
has been serving as acting
director since last July. Tomley joined the
port in 2005 and has been serving as assis-

tant director of the division since 2008. In
her new role, she is responsible for the
port’s signature environmental programs:
the Green Port Policy and the San Pedro
Bay Ports Clean Air Action Plan. According
to a statement from the port, “The division
coordinates programs to improve air, water
and soil quality, preserve wildlife habitat
and integrate sustainability into port practices.” Tomley earned her master’s in environmental science from the University of
North Carolina and her bachelor’s in chemistry from Cal Poly San Luis Obispo.
Leadership Changes For Alaska Air
Group’s Legal Division – The board of
directors for Alaska Air Group, a subsidiary
of Alaska Airlines which serves Long
Beach Airport, approved several leadership
changes in the company’s legal division.
Herman Wacker, Air Group's deputy general counsel and managing director of legal,
has been elected vice president of legal.
Shannon Alberts, managing director of
corporate affairs and assistant corporate
secretary, has been elected corporate secretary. Kyle Levine retains his role as
deputy general counsel and managing
director of legal, and replaces Alberts as
assistant corporate secretary.
New Senior Project
Manager At SCS – Long
Beach-based
SCS
Engineers announced the
appointment of Solavann
Sim as senior project manager to the company’s
Southwest Solid Waste Division. Sim is
responsible for planning, executing and
implementing projects in waste management, landfill gas management, and landfill
construction, monitoring and maintenance.
He previously worked for Waste
Management (WM), where he oversaw all
landfill gas operations at nine WM landfills
in Southern California and Hawaii. Sim
earned his bachelor’s in civil engineering
from California State University, Fullerton.
Law Firm Adds Senior Associate –
Christopher J. Cummiskey has joined the
Long Beach-based law firm of Garcia,
Artigliere & Schadrack. The firm, which
specializes in elder abuse, has offices in

Chouras
Realign
Operations
Ryan Choura is pictured with
his father, Jim Choura, at The
Grand Event Center in Long
Beach. The younger Choura
is now focusing his efforts full
time on Choura Events, a fullservice boutique event rental
and tenting agency based in
Torrance. The elder Choura
serves as CEO of Choura
Venue Services, the catering
and venue management company located at The Grand.
(Photograph by the Business
Journal’s Thomas McConville)

Arizona, Florida, Kentucky and Washington.
According to the firm, Cummiskey is experienced in civil litigation, commercial litigation, personal injury, product liability and
employment-related disputes. He most
recently worked with a large defense firm
representing insurance companies, corporations and government entities in federal and
state matters. Cummiskey earned is Juris
Doctor from Syracuse University and his
bachelor’s from Ithaca College.
Former Harbor Commissioner Joins
Vectis
Strategies
–
Carmen O. Perez, a former
two-term member of the
Long Beach Board of
Harbor Commissioners,
has been named a partner
with Vectis Strategies, a bi-partisan
national public relations and public affairs
firm. Vectis has offices in Los Angeles,
San Diego, Sacramento and Washington,
D.C. It has clients in the utility, financial
services, technology, public and private
infrastructure, not for profit and real estate
sectors. Perez is the former vice chair of
the Democratic National Committee and
was chief deputy to former L.A. County
Supervisor Kenneth Hahn.
New Officers For International Trade
Goup – The Los Angeles Customs Brokers
and Freight Forwarders Association, which
was formed in 1949 and currently represents more than 250 members, elected new

officers for 2014. They are: President –
Mark Hirzel, western regional director of
MIQ Logistics; Vice President – Wayne
Wagner, senior manager, U.S. Brokerage
Services of FedEx Trade Networks;
Secretary – Barbara Clarke, vice president
of Williams Clarke Co.; Treasurer – Karen
Quintana, director, national sales, customs
brokerage, Yusen Logistics (Americas);
and Chair – Vincent Iacopella, managing
director of The Janel Group of Los
Angeles. For more information about the
association, call 818/951-2841.
New Uptown Group Elects
First President – The newly
formed Uptown Property
Business
Improvement
District (UPBID) in North
Long Beach elected Yanki
Greenspan of Westland Real
Estate Group as its first president. Also,
Lorena Parker was named interim program
manager. The UPBID area boundary is
Atlantic Avenue between Market Street on
the south and Artesia Boulevard on the
north, and along Artesia from Atlantic to
Orange Avenue on the east. “This district
represents the commitment of North Long
Beach property owners to the revitalization
of our business corridors and the entire
community,” Greenspan said. “I look forward to being a part of this great transformation.” For more information, e-mail
UptownPBID@gmail.com. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 21

GRAND PRIX HIGHLIGHTS
February 18-March 3, 2014

Long Beach Business Journal 21

Celebrating 40 Years
(Continued From Page 1)

four-time Indy 500 winner and would add
four CART/Indy car championships to his
resume before he retired.
And their two sons – Michael and Al Jr.,
popularly know as “Little Al” – were flashing signs of future Indy car greatness.
Mario won the first battle. Fighting off
fuel economy issues that plagued many
starters, he won the 1985 Toyota Grand
Prix of Long Beach over fast-closing
Danny Sullivan, whose March ran out of
fuel less than 100 yards from the finish,
handing second place to Emerson
Fittipaldi.
The following year, Michael (March)
and Little Al (Lola) gave Long Beach
race fans a hint of things to come, engaging in a thrilling duel over the race’s final
laps, with Michael beating Little Al to the
checkered flag by a scant .0380 seconds –
still the record for closest margin of victory at Long Beach.
And, race fans were beginning to take
notice: More than 77,000 packed the
grandstands to watch the race.
Mario was dominant in 1987, steering
his Lola from the pole position to an
immense one lap plus-29 second win –
almost 2.5 miles – over Little Al. Tom
Sneva finished third, just ahead of Michael.
The following year, “the streak” began.
And Little Al even went Mario one better. Starting fourth, he went on to lead 73 of
the race’s 95 laps and crossed the finish
line one lap plus-33 seconds ahead of
Bobby Rahal for his first Toyota Grand
Prix of Long Beach victory. More than
84,000 race fans roared their approval.
He won again in 1989 . . . but this win
wasn’t quite so popular with the legions of
Andretti fans.
Dueling with Mario in the final laps,
Little Al locked up his brakes and spun
Mario off-course in Turn 3. Unser went on
to win his second straight, beating Michael
and Fittipaldi to the checkered flag, but was
greeted with a hearty chorus of boos from
Andretti supporters on his victory lap!
Little Al made it three straight the following year, beating Fittipaldi and Sullivan
to the finish, but it was Michael Andretti
who got the lion’s share of the kudos.
Starting 5th, Andretti spun out on the second lap and dropped to last place. He then
methodically worked his way back up the
field, picking off one car after another,
crossing the finish line in fourth place to
thunderous applause.
Unser went on to become the 1990 series
champion.
As he sat on the starting grid for the
1991 race, Little Al found himself surrounded by Andrettis: Michael sat on the
pole, with Mario starting 7th, son Jeff 12th
and Mario’s nephew, John, 10th! Unfazed,
Little Al led 93 of the race’s 95 laps in his
Lola to score an unprecedented fourth
straight Long Beach victory in front of
more than 82,500 fans, part of a three-day
race record attendance of 204,000.
“Some tracks you just perform better at,”
Unser said when asked about his dazzling
winning streak. “Long Beach is one of
those for me. I love racing here and it gives
me a lot of confidence.”
Mario Andretti noticed it, too. “You see
it when Al gets behind the wheel here,”

Michael Andretti 1986

Danny Sullivan 1992

All photographs provided by the Grand Prix Association of Long Beach
Then-governor George
Deukmejian looks on
as Michael Andretti
hoists the 1986
winner’s trophy.
Al Unser, Jr.,
is at far right.

Al Unser, Jr., 1988

Andretti said. “He knows he’s going to do
well so he drives a lot smoother. To beat
him, you have to run an almost-perfect race
and hope he makes a mistake.”
Danny Sullivan broke Little Al’s streak
the following year after mechanical woes
sidelined Michael Andretti and others,
but it was yet another close finish:
Sullivan beat Bobby Rahal to the finish
line by 0.596 seconds with Little Al settling for fourth place after teammate
Sullivan spun him in Turn 6 with just over
two laps to go.
In 1993, the face of CART/Indy car
began to change. More foreign-born drivers were joining the series and the starting
field at Long Beach contained no less than
ten foreigners.
One of them was no stranger to motor
racing combat: Nigel Mansell.
The reigning Formula One Champion had
left F1 after a disagreement with team owner
Frank Williams. Ironically, Mansell inherited
the Lola cockpit vacated by Michael

Andretti, who was competing
in his first year of F1 racing!
Another
foreign-born
driver was Canadian Paul
Tracy, and Tracy immediately made his mark on the
streets of Long Beach, cruising to his first-ever Indy car
victory by 12 seconds over
Bobby Rahal, with Mansell
finishing third.
Little Al got back on the
winning track in 1994, posting a 39-second win over
Mansell and Robby Gordon, and went on to
win his second CART/Indy car crown.
Further back, Mario Andretti finished
fifth. After 36 years of racing, it was to be
his final appearance on the streets of Long
Beach in a race he won four times and had

Paul Tracy, 1993

helped to survive at two critical junctures.
There was another significant change in
the wind, too.
Two thousand miles away, in
Indianapolis, a man named Tony George
announced the formation of the Indy
Racing League. ■

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 22

PERSPECTIVE
22 Long Beach Business Journal

February 18-March 3, 2014

Resilience: The Art Of
Overcoming And Restarting

■ EFFECTIVE LEADERSHIP
By Mick Ukleja
esilience is an appealing characteristic.
The temptation is to make it bigger than
life. It’s not bigger than life. It’s how we go
through life successfully. When we think of
resilient people, we tend to attribute to
those personalities heroic attributes. They
face the un-faceable and solve the unsolvable. But putting our energies into developing
heroic qualities can cause us to chase after
something that is unattainable. In that illusive chase, we can miss the real ingredients
of resiliency that we need on a daily basis.
Life is not an unending string of good
after good. We face struggles, adversaries,
and difficulties. We steer through everyday
challenges. We overcome the difficulties of
our past. We get thrown off course and have
to get back on. New experiences challenge
us and sometimes even frighten us.
Overcoming them takes resilience. Like one
lady said, “I’m never down. I’m either up,
or getting up.” It’s the ability to get back up,
go one more lap and rise to the occasion.
In the world of engineering a resilient
material is capable of withstanding shock,
bending without breaking, and then returning to its original position. For humans it’s
flexibility during life’s pressures. They come
in various waves and to varying degrees.
Humans, just like resilient material, some-

R

times shrink to minimal needs during high
pressure, and then gather their energies to
restart or sustain the mission, project, or
issue. Winston Churchill said, “Storms don’t
last. They go away.” He also said, “When
you are going through Hell . . . keep going!”
Reinhold Niebuhr’s prayer (1943), is one
of the keys to resilience. “Grant us
• the serenity to accept the things we cannot change,
• the courage to change the things we
can, and
• the wisdom to know the difference.
It is very easy to fall into the trap of trying
to fix things that are out of our control. On
the other end of the spectrum we can give up
too soon and miss problem solving opportunities. And this is where the quality of our
thinking comes into play. Our thinking
influences our emotions and our behavior.
When life gets tough we have our own
way of explaining it. It’s our thinking
style. It’s important to know what you are
feeling. But don’t stop there. Take a step
back and notice what you are thinking. Do
I tend to blame myself or others for the
issue or hardship? Am I stuck in this problem permanently or is it temporary? Does
this issue impact every area of my life or
project or is it affecting only certain parts?
Which parts, and how?
Resilience is about breaking our “thinking trap” habits so that we can think more
flexibly and accurately. Accurate thinking
is useful thinking, and useful thinking will
help you come up with more constructive
ways to approach the issue. That in turn
will strengthen your resolve. Emotions are

Inland Connections

■ TRADE AND
TRANSPORTATION
By Tom O’Brien
he success of our ports depends upon
a complex network of relationships
between partners up and down the supply
chain. That list of partners includes ocean
carriers, truckers, rail companies and others who handle the cargo on its way from
origin to destination. Since the early
2000s, there has been a renewed interest
by some stakeholders in developing inland
ports as a means of improving the competitiveness and efficiency of our trade hubs,
including the ports.
An inland port is a site located away
from a traditional seaport, airport or border crossing that contributes to the efficient flow of goods through both intermodal transportation services and value
added cargo handling and processing.
These services are integrated with the
major trade hub and help provide access
to the inland market for both inbound and
outbound traffic. Many inland ports act
as distribution centers, depots for containers and chassis, warehouses and locations for other general logistics services.
Inland ports may also play a key role in
the transfer of full or empty containers to
railcars or add value to the supply chain
as a free-trade zone.
Some inland port facilities are located

T

outside of urban areas to be near manufacturing and distribution centers; others are
located adjacent to large urban areas to
take advantage of pre-existing networks of
suppliers and customers. In almost all
cases, they are located where there is
available land at relatively affordable
prices for warehousing, distribution and
transloading; reliable and competitive rail
service; good access to a highway network; and available labor.
Successful inland ports help major seaports accommodate the growth in container
volumes while reducing costs related to
truck travel time. For planners and elected
officials at the local level, inland ports are
sometimes viewed as an opportunity to
move cargo processing and distribution
away from congested areas. The closure of
military bases in the 1990s and projections
of dramatic growth in containerization in
the early 2000s prompted freight carriers
and public agencies to explore strategies to
take advantage of newly available land
while at the same time reducing port congestion by adding new cost-effective inland
ports to their supply chains. At about the
same time, public agencies were seeking
transportation strategies to lower truck emissions by reducing vehicle miles travelled.
Major inland ports serve trade hubs as
diverse as Houston, Chicago, Kansas City,
St. Louis, Atlanta, Memphis, Columbus
and Charlotte. Newer inland ports have
been created in Greer, South Carolina,
Front Royal, Virginia, and Alliance, Texas.
Closer to home, a 2008 study of the potential for rail shuttle service to a new inland
port in the Inland Empire concluded that,
while the project was technically feasible

“Man never made any material as
resilient as the human spirit”
– Bern Williams

important, but don’t assume that your
emotions are an accurate indicator of what
is going on. Some people personalize,
some magnify, and some catastrophize.
We all have thinking traps. The key is to
know what yours is so you can avoid it.
That has more to do with resilience than
most would imagine.
Do you tend to get out of sorts when
something confronts you? Or do you see
things happening FOR you instead of TO
you? Sometimes the things that are happening TO you, are happening FOR you,
so that something can happen IN you.
What happens in you builds resiliency
to not only withstand issues and adversity, but also to eliminate distractions that
diffuse our focus, that slow us down, and
that increase our fatigue.
A resilient mind has the ability to go
further, faster, with less fatigue. It doesn’t
eliminate the struggles and everyday
tough times. And resilience is not a commodity that you either have or don’t have.
It is a process. It requires practice.
So start today by making use of every circumstance you face. Use those issues of life
as a valuable resource to help you understand the way you think. Spot the thinking
traps and make an immediate adjustment.
This will impact the way you feel and act.
And like any learning, the feedback,
insights, and mutual support of others
makes it easier and more effective.
(Mick Ukleja is a consultant, author,
coach, keynote speaker and president of
LeadershipTraq.Check his weekly blog at
www.leadershiptraq.com.)
and would produce a small reduction in
vehicle miles traveled, it was not justified
for a variety of institutional and economic
issues and could not compete with more
pressing freight-related investment options.
That’s because an inland port needs to
be located where local officials support
its development and are willing to offer
strong incentives to participants. Local
residents need to be convinced that there
are minimal potential conflicts with other
land uses and that congestion and other
environmental impacts can be mitigated.
And of course, service providers want to
see that the costs savings in logistics
operations significantly offset the cost of
moving those operations further from the
coastal ports.
The primary planning goal in developing a new inland port is to ensure there is
a strong and sustainable economic benefit
from the capital investment in which the
total logistics costs – including capital,
fuel, labor, transit time – are lower, and
flexibility and reliability are significantly
higher than expanding in the vicinity of
the coastal port area would be. Inland port
strategies that do not take this into consideration are not likely to be successful.
Another planning concern is the uncertainty of future growth in trade volumes.
Investment in new capacity simply to
relieve current congestion may be risky if
that volume is not sustained or shifts to
other locations. Success depends upon a
clear demonstration of potential costs and
benefits to everyone involved.
(Dr. Thomas O’Brien is the interim
executive director of the Center for
International Trade and Transportation at
CSULB and an associate director for the
METRANS Transportation Center, a partnership of USC and CSULB.)

Having Joint
Replacement
Surgery?
Here Is What To Ask Your Surgeon
ou’ve just been told by your primary
care physician that you need a hip or
knee replacement. They referred you to their
favorite orthopedic surgeon. What do you
do next? Go to the Internet and research?
Better yet, go meet several different surgeons, ask your questions and then go to
the Internet for confirmation of the doctors and the answers.
Here are some questions to ask your
prospective
surgeon so you can be as
■ HEALTHWISE
informed as possible.
By Douglas
1. Do you do minimally invasive surGarland, M.D. gery? – The term minimally invasive is a contradiction. Arthroscopy is minimally invasive. Arthroscopy is a surgical procedure by which the internal structure of a joint is examined for
diagnosis and/or treatment using a tube-like viewing instrument called
an arthroscope. If a procedure can be done arthroscopically instead of
by traditional surgical techniques, it usually causes less tissue trauma,
may result in less pain, and may promote a faster recovery. All other
surgeries are determined by body build. If you are large, a larger incision will be necessary to get to the joint and vice versa. Incision size
is not associated with pain, blood loss, discharge times or outcomes.
2. How many joint surgeries do you do? Are you fellowship
trained? – 70 to 80 percent of joint replacements are performed
by general orthopedists. A surgeon who does one replacement per
week (50 per year) is a reasonable vantage number. Higher volumes are associated with better outcomes.
3. I know most knee replacements are done from the front
of the body. Which approach do you use for hip replacements? – The posterior (back of body) approach is the most common but was associated with dislocations and leg length discrepancies. With better surgical techniques and larger prosthetic head sizes
the incidence of dislocations and leg length equality between the two
approaches are now similar. There presently are minimal if any differences between outcomes within any of the surgical approaches.
4. Do you use muscle sparing approaches? – Most orthopedic
surgeries are muscle sparing (not needing to cut through muscles).
5. Should I have the latest and greatest implant? – No. There
have been as many failures as breakthroughs over the last 10 years.
None of the newer devices have consistently improved outcomes.
6. Should I donate blood or will I receive blood post-operatively? – Smaller incisions, attention to surgical technique, spinal
anesthesia and drugs to prevent bleeding have reduced transfusion
rates to fewer than 10 percent incidence. Donating blood or
receiving blood is rarely necessary.
7. What type of anesthesia do you use? – Regional (such as
anesthesia given through the spine) anesthesia when possible is
the correct answer. It is associated with the best outcomes: early
mobility, pain management and decreases in blood loss, infections, transfusions and blood clots. It potentially allows a rapid
recovery, positive hospital experience and outcome.
8. How do you decrease the risk of blood clots after surgery? – As long as some type of chemical (medication) or
mechanical (medical devices) and/or protocol is used, the incidence of a blood clot should be below one percent. Tell your surgeon if you have a history of a previous clot or any bleeding/clotting disorders as this may increase your risk.
9. What are the major and minor complications and the incidence? – The incidence varies between five to eight percent during the
first three months. Major complications include: pulmonary
embolism, sepsis, cerebrovascular accident, cardiac complications,
renal failure, deep wound infection, nerve injuries, dislocations (hips).
Minor complications are: urinary tract infections, blood clots, pneumonia. Diligent medical management is imperative after surgery.
10. Is there anything I can do? – All surgery has a risk/reward
ratio – so tilt the scales toward the reward side, while reducing risk.
Stop smoking immediately. See your primary care physician for a
clean bill of health. Have your lung, cardiac, diabetes and blood
pressure under control. Push your body mass index (BMI) below 40.
After you have done your research and met different surgeons,
keep in mind these criteria when making your decision: Select a
higher volume surgeon who is affiliated with a high volume hospital where spinal anesthesia is the norm and provides diligent
post-operative medical management to include some type of clot
prevention after surgery.
(Dr. Douglas Garland is medical director of the MemorialCare
Joint Replacement Center at Long Beach Memorial.)

Y

1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:28 AM Page 23

PERSPECTIVE
February 18-March 3, 2014

Long Beach Business Journal 23

Growth In Multifamily Demand Is Predicted

■ REALTY VIEWS
By Terry Ross
ecause of economic, social and
generational changes in the
population, the outlook for apartment investing and building appears
to be on the rise through the next
few years.
During the recent International
Builders Show (IBS) in Las Vegas, a
panel discussion on the immediate
outlook for apartments took an optimistic approach coming out of the
down years of the housing collapse,
and pointed towards some encouraging signs from various phases of the
economy.
“The multifamily market has
rebounded significantly from its
trough in 2009 at 82,000 multifamily housing starts to 340,000 in
2013,” said National Association of
Home Builders Chief Economist
David Crowe. “NAHB is forecasting
363,000 multifamily housing starts
in 2015, which is above the previous
longer term average of 340,000 as
more young adults prefer renting.”
The strong performance in multifamily comes from three sources,
explained Crowe. “First, during the
collapse, production of multifamily

B

housing had significantly decreased,
so part of the resurgence in 2011
was just catching up with a more
normal flow. Second, the strong
demand for apartments is being fed
by a rising demographic of echo
boomers who will continue to grow
in size as we absorb people born
after 1980. Third, young adults who
might have otherwise chosen homeownership, and some older adults as
well, are hampered by a variety of
issues, such as unusually tight
underwriting standards for mortgages, lower credit scores because
of the slow employment market and
lower entry salaries. As a result, the
share of households that rent rather
than own has increased steadily
since 2004 and will likely continue
until jobs are more secure, mortgages more accessible and careers
more stable.”
Many markets have regained their
footing and are producing at least as
many multifamily units as they did
during the relatively stable period
between 1996 and 2006. “The multifamily market has come a long way
since the collapse,” said panelist
Guy K. Hays, president of Legacy
Partners Residential Inc. in Foster
City, California. “Overall, supply
and demand are in balance, and in
most markets there is a need for the
continued production of new units.”
While land costs to build apartments have dropped since the beginning of the recession, the over-supply that plagued the market just a

few years ago has abated because of
additional renters in the market. So,
the economic forces are more
aligned than they have been in a
while for a healthy apartment market. There are still challenges that
face the industry – such as the
availability of labor and rising cost
of some building materials. But
demand for apartments is strong
enough for developers to proceed
in most markets, the conference
panelists noted.
In an analysis by National Real
Estate Investor, it called the multifamily market the darlings of the
commercial side of real estate and
referred to it as the segment with
the strongest fundamentals, greatest returns and the best access to
financing.
The site also ranked the Top 10
U.S. markets for apartments based
on which ones will generate the
highest rental rate growth while
maintaining high levels of occupancy for this year. Half of that
list is located in California and
seven of the 10 are on the West
Coast. Only one from the East
Coast made the list – Miami.
Two areas from Southern
California – Orange County (8th)
and San Diego (10th) – appeared on
the list, with Oakland-East Bay
(1st), Portland, Oregon, (2nd), San
Francisco (3rd), San Jose (4th),
Miami (5th), Houston (6th), Denver
(7th) and Seattle (8th) rounding out
the Top 10.

According to this survey, all 10
of these markets will get significant new supply this year but will
not be in danger of overbuilding
since they have lacked sufficient
supply during the downturn in the
economy. It was also noted that a
common trait of these markets is
their ability to attract high-paying
jobs and young, well-educated residents into areas that have affordable single-family housing – especially in the Bay area, Orange
County and San Diego. Orange
County is within the top 50 counties nationwide in terms of the percentage of households that rent versus own residences and at the end
of last year was looking at a 3.6
percent growth rate in rents and an
occupancy rate of 95.9 percent.
San Diego had similar numbers at
3.6 percent growth in rental rates
and 96.2 percent occupancy.
Compare these with the top rental
market in the nation – Oakland-East
Bay, with a 6.6 percent growth in
rents last year and occupancy at 97.1
percent. An average household
income of almost $160,000 and scant
new growth in the number of apartments being built make this an
investor’s dream – if you can find the
right deal in this area.
(Terry Ross, the broker-owner of
TR Properties, will answer any
questions about today’s real estate
market. E-mail questions to Realty
Views at terryross1@cs.com or call
949/457-4922.)

■ THIRD
SECTOR REPORT
By Jeffrey
Wilcox
t’s too bad that whenever the word,
“succession,” finds its way into
conversations at nonprofit organizations, most view its utterance as code
for someone needs to go.
When an inevitable transition does
occur, these same organizations soon
discover that having kept succession
in the closet ultimately costs their
worthy causes significant amounts of
time, money and angst.
The Third Sector is no different
than the other sectors when it comes
to human resource matters and leadership. Most transitions in key positions aren’t planned. Messy exits
can be a public relations challenge.
And, transitions that should have
happened earlier, but for personal or
political reasons were avoided, creates a domino-effect of other’s
choosing to vacate their positions
instead.
While nonprofits face other common workforce realities such as a
Baby Boomer generation retiring en
masse and the difficulty of attracting

I

and keeping up-and-comers, the sector has a couple of quirks that make
leadership continuity slightly more
complicated: The first is that each of
these realities can be applied not only
to paid employees, but also to volunteers. The second is that without term
limits and a commitment to succession, great causes can easily evolve
into family-run businesses disguised
as nonprofits.
All of these factors sum up to a
subject that is emotionally charged
and filled with deeply-rooted confusion over what constitutes prudent
succession planning for a nonprofit
organization.
Replacing key positions, managing
with a leadership void, and curbing
high attrition are expensive propositions for any enterprise. For organizations that depend on people’s generosity to survive, however, these are
situations that demand pro-active and
visible attention.
The Daring to Lead study released
by CompassPoint Nonprofit Services
in Oakland dramatically illustrates
the current state of the sector when it
comes to succession:
• 17 percent of 3,000 nonprofit
organizations indicate having a
succession plan;
• 24 percent of nonprofit executives report planning to vacate their
positions within two years;
• 45 percent have no executive per-

formance review process to annually
discuss succession.
Based on these numbers, there is a
significant quantity of important nonprofit organizations whose futures are
at risk. Sadly, most of them have little
idea how large the risk is because succession has been considered an
unmentionable in their cultures.
For those who have believed that
investing time and money in leadership development, retention and succession will hurt a nonprofit’s overhead calculations, the Daring to Lead
numbers suggest that the day in court
is nigh. The costs of sloppy human
resource practices, poorly managed
executive exits, replacing avoidable
vacancies, and a lack of competent
future board leadership creates a tab
that is going to be difficult to prove as
circumstantial. The sum of these costs
will be even more difficult to defend
as responsible fiduciary oversight in
the name of charity.
Succession, like fundraising, is an
integral piece of a successful nonprofit’s organizational culture. Both
subjects are forms of resource development that are equally vital for fueling its future.
Cultures that value succession have
six distinct attributes. The first is operating with a common understanding
that succession is about ongoing efforts
to assure a continuity of good leadership is in place for the organization. It

is not about naming an heir-apparent or
planning one person’s transition.
The second attribute is completing
a contingency operations plan every
year and creating a warehouse of
vital organizational information
should a key position become vacant
for any reason. The third attribute is
a series of board-approved succession policies which mandates such
things as performance reviews, term
limits, human resource procedures
and nominations.
Demonstrated competencies in
basic human resources is the critical
fourth attribute. The fifth is completing and managing from a strategic
plan that pays as much attention to
developing human capital as it does to
developing financial capital for creating its future. And, the final attribute
is assigning the task of succession to
key people as part of their job responsibilities and performance objectives.
For me, nonprofit leadership succession has become an obsession.
Perhaps I’ve stood on the curb for
too many years watching people
confuse or avoid the subject and
declining to get on the succession
planning bus. It’s painful to witness
so many great executives, boards
and organizations now at significant
risk of being hit by it.
(Jeffrey R. Wilcox, CFRE, is president and CEO of The Third Sector
Company, Inc.)

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in whole or in part without written permission is strictly prohibited unless otherwise stated. Opinions expressed by
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1_LBBJ_Feb18_SectionA_LBBJ MASTER LAYOUT 2/17/14 9:29 AM Page 24

LOOKING TO GROW IN 2014?
We’re here to help.
Administered by the City of Long Beach, Pacific Gateway helps local businesses stay competitive. We have
programs to help employers find the right candidate, train new staff, and access every available hiring tax
credit. Just a few examples of our helpful programs:
UÊCustomized training programs cover half the cost of training a new employee, in almost any area of
training you can think of.
UÊ On-the-Job Training funds cover a percentage of wages for the

few months a new employee

spends coming up to speed.

How can these programs help your business grow?
Call (562) 570-4577 to speak with Don Caldwell,
Business Assistance Program Manager.